Barataria - The work of Erik Harehttp://erikhare.com
I don't break news, I fix it.Tue, 31 Mar 2015 19:49:01 +0000enhourly1http://wordpress.com/http://0.gravatar.com/blavatar/4128d6447bd355f35b701d58ff4618cb?s=96&d=http%3A%2F%2Fs2.wp.com%2Fi%2Fbuttonw-com.pngBarataria - The work of Erik Harehttp://erikhare.com
Coopertitionhttp://erikhare.com/2015/03/30/coopertition/
http://erikhare.com/2015/03/30/coopertition/#commentsMon, 30 Mar 2015 00:00:44 +0000http://erikhare.com/?p=6591]]>Our team, 2491 No Mythic, is set for the North Star Robotics tournament next week. It’s an event that teaches all the aspects of engineering and entrepreneurship – design, build, teamwork, and budgeting. This year’s competition also brings back an important concept in any business – Coopertition. The teams competing in a match can bump up all their scores at once if they work together.

It goes against the sporting aspects of the match in many ways, but it is critical. In business, companies have always worked together for mutual benefit even as they have competed. Cooperation can be a powerful force for change or a descent into stagnation. No matter what, business has never been purely a “survival of the fittest” in ways that define the boundaries of ethics and will almost certainly be more critical in a close-knit global economy increasingly defined by technology.

A classic trade convention, where people in the field swap stories (but leave out the good ones).

The best examples of cooperation in business come from classic “trade associations” – the groups that put out publications and assemble conventions where everyone in the biz can get together to swap stories. They may even set up standards that insure quality and have an independent laboratory to verify safety – such as Underwriter’s Laboratory, created by insurance companies all eager to prevent fires caused by the growing use of electrical devices over 120 years ago.

Sometimes, they go a bit further than that, such as the Western Enegy Alliance that filed suit on behalf of oil drillers to block new regulation. That is a great example of Coopertition because it appears that they are against the disclosure based regulation in part to protect their own trade secrets – working together to preserve their individual advantages.

That’s what Coopertition is usually all about – an agreement on the rules of the game where competition will take place.

The Peugeot 107 – it’s exactly the same as the Toyota Aygo, and sold in the same markets.

Lately, however, computer companies have been forced together to define more than just the standards of their field. Apple relies heavily on Samsung for key components in its iPhones, even after their epic multi-billion dollar patent infringement suit. Car companies often share components, and the Peugeot 107 and Toyota Aygo were designed together by the competitors (though neither is sold in the US).

This gets awfully close to the downside of cooperation, which would be called collusion. Price fixing is illegal in most nations, so a direct agreement on price is more than unethical. But it may come about when no one happens to lower a price in response to lower costs or a lead is followed when one raises prices, which happens often in the airline industry.

What level of cooperation is legal and ethical, and what is not? The lines are being tested all the time by innovation. The best example of crossing the lines comes from the mortgage industry, circa 2006.

What’s the risk?

Headlines were made for the fines imposed on Standard & Poors, the agency that rated far too many bad mortgages as top-notch investments. But beneath the headlines there were many more loans made in a gray area – properly labeled as risky but still gobbled up by investors eager for a piece of the growing mortgage backed securities bonanza. The industry simply changed all at once, operating under the belief that the risk of default was outweighed by the interest rates charged and fees collected.

The relative mix of cooperation and competition is a big part of business cycles, I would argue. A perfectly cooperative economy is a tranquil one that never changes and hangs on as long as everyone is happy with their share of the pie. A completely cut-throat competitive environment ultimately puts pressure on labor and the environment, at least until they hit the breaking point and long for a more peaceful and safe existence.

It shoots, it scores!

New areas of Coopertition are naturally going to rise, much like the strange relationship between Apple and Sumsung, as natural monopolies come about by new technologies (read: skills) created by companies. With the appetite for risk at a low point at the end of this Depression, cooperation is almost certainly going to rise. But what will stop that from going into collusion, price fixing, and fraud?

This naturally takes us back to those who will define the next economy, which are the business and engineering leaders of tomorrow. Many of them will be at the robotics league competition this week, and I have the great pleasure of working closely with them to help them define just what Coopertition means to them – at least within the confines of the game we’ll be playing.

It’s hard to get past this image when nasty stuff keeps happening.

Ultimately, it’s about ethics. There will be new frontiers in ethics defined by the natural cooperation necessary to advance technology and the equally natural competition to define a personal edge. Teaching the basics of Coopertition to this generation is easy enough as they can experience what it means for themselves. But the ethical and legal standards are going to be a lot harder. What, indeed, are we teaching the kids so that they will be ready to create a world that is fair and reflects the importance of hard work with innovation?

Filed under: Money, Nooze, People & Culture]]>http://erikhare.com/2015/03/30/coopertition/feed/12TradeShowwabbitoidA classic trade convention, where people in the field swap stories (but leave out the good ones).The Peugeot 107 - it's exactly the same as the Toyota Aygo, and sold in the same markets.What's the risk?It shoots, it scores!It's hard to get past this image when nasty stuff keeps happening.A Bloody, Dangerous Gamehttp://erikhare.com/2015/03/27/a-bloody-dangerous-game/
http://erikhare.com/2015/03/27/a-bloody-dangerous-game/#commentsFri, 27 Mar 2015 00:27:03 +0000http://erikhare.com/?p=6587]]>The Middle East is dangerous, complicated, and generally just plain messed up. You may respond to that statement by saying, “Yeah, and the sun rose this morning,” or something less polite. But for all the turmoil that the region has been through in recent years it’s actually much worse right now.

A combination of shifting alliances, horrific blow-back from past adventures, and an ancient rivalry blowing up fast are converging rapidly into one regional conflict. Who is on whose side? Who might or might not be winning? It’s nearly impossible to tell, and that makes everything far more dangerous than ever.

Houthi Rebels in Yemen. They are winning, though Saudi Arabia is now intervening.

The region has become a complicated chessboard with three players standing on the field – Saudi Arabia, Iran, and Israel. The first two can be relied upon to take up any cause that is Sunni or Shi’ite, respectively, with some kind of support. The US is a close ally to two of them but a bitter enemy of the third – with some kind of new agreement with Iran very likely by 31 March. None of the players have a history of aligning with each other.

The war in Syria has collapsed into a Sunni-Shia conflict, as discussed here last October. What is new is the dramatic escalation of the Yemeni Civil War, pitting the ruling Sunnis against Houthi rebels, who are Shia. The latter appear to be winning lately, running the President out of the nation into Saudi Arabia for security. The Saudis have taken to providing airstrikes on the rebels. Iran is calling for an end to escalation while they deny the commonly reported claim that they are backing the rebels.

This marks the second place in the region that Sunni and Shia are shooting at each other and the backing of the two supporting nations is reasonably overt.

Hassan Rouhani, President of Iran. He is not a reliable bogeyman, but can we go as far as to make peace with him?

How does this play into the negotiations with Iran? The short answer is that it doesn’t, apparently, with the deadline for a broad agreement coming up fast. The US is largely staying out of sectarian conflicts, allowing Saudi Arabia to act as it sees fit. Weapons on both sides are largely US made, at least since the rebels captured a Yemeni goverment position – much as ISIL was made into a strong fighting force by overrunning a US supplied Iraqi army. That came after they were armed by the Saudis, who now fear ISIL as much as anyone and reasonably see them as a threat at leas as big as anything posed by the Shia. It’s making them paranoid and reactionary.

Other than drowning the region in weapons, the US is largely staying out of the conflicts except the bombing of ISIL.

Our strongest ally in the region, Israel, is seeing its relationship with the US in the most peril ever. Recent statements by Netanyahu have strained relations enough, but allegations of even more Israeli participation in US politics are far more troublesome. That Israel spied on the Iranian talks is not a surprise, but the allegation in the Wall Street Journal that Republicans (and a few pro-Israel Democrats) were fed information from the spying is rather alarming. The Obama administration has to be fed up with Israel – just as we are negotiating with Iran, again, on nuclear weapons.

An Iranian Shehab-3 Missile. We have more information on what Iran has than we do for Israel.

This all comes on the heals of a Freedom of Information Act (FOIA) request coming to light that shows that in 1987 Israel definitely had nuclear weapons, something never stated so explicitly before. In other words, the very Nuclear Non-Proliferation Treaty (NPT) that we are attempting to apply to Iran in the negotiations was definitely violated by Israel (a non signatory) with US assistance.

And, of course, the only other place in the region with shooting was when Iran-backed Hamas took on Israel.

Where does that leave the US in terms of diplomatic or military alliances? We know for certain that the fight against ISIS has required cooperation between the US and Iran, which at least partially completes our connection with the third player on the field. Weakened relations with Israel and a wariness against Saudi Arabia leave us remarkably neutral all around.

But there are indeed three sides in various states of hostility flaring up into a regional war. It is impossible to keep track of who is gaining where. Without any possibility of alliances between the three sides no one has the advantage. With a lot of US made weapons the region can expect bloodshed to only accelerate.

There is nothing more dangerous than a heavily armed stalemate, and that is what the region has achieved. We can reasonably assume that the US relationship with all three is moving toward a strange equality, meaning that will not favor one over the other as much as we have in the past. And each has a long standing feud with the other two.

It can only get worse, especially if Israel feels compelled to act on its own as a new isolation powers a new paranoia.

Filed under: Nooze, Politics]]>http://erikhare.com/2015/03/27/a-bloody-dangerous-game/feed/21wabbitoidHouthi Rebels in Yemen. They are winning, though Saudi Arabia is now intervening.Hassan Rouhani, President of Iran. He is not a reliable bogeyman, but can we go as far as to make peace with him?An Iranian Shehab-3 Missile. We have more information on what Iran has than we do for Israel.Technology & Sciencehttp://erikhare.com/2015/03/25/technology-science/
http://erikhare.com/2015/03/25/technology-science/#commentsWed, 25 Mar 2015 00:01:29 +0000http://erikhare.com/?p=6554]]>A very bizzy day is time for a diversion from the usual heavy dose of economics and politics.

If you peer through a magnifying glass at a bug on a leaf, you may find yourself looking at a different world. Tiny legs might work their way along the delicate structure, as firm as a human hiker across the solid ground itself.

This world takes on the color of the mind observing it when it becomes a story. Some may see this new thing and ask questions – how the bug came to like that particular leaf, how it is able to grip it, and so on. Others may be content reporting the details of the situation, such as the shape of the legs and jaws of the bug.

Anytime new perspectives open up the difference between science and technology is revealed at its basic essence. Science is a practice of asking questions far more than providing answers. Technology is about rendering that new information into something practical and useful. That difference may seem subtle, but it is critical to understanding how new information shapes our personal and public lives in a world bombarded with new ideas and observations.

Detail from “The School of Athens” by Raphael

Science is, at its heart, a process. The Scientific Method is a way of asking questions in an organized and logical way that produces logical and repeatable results. The concepts were first laid out by the fathers of logic, Plato and Aristotle, the former arguing that fundamental principles drove understanding of earthly observations and the latter the other way around. These philosophical underpinnings were turned into a formal process 1500 years later by Alhazen, working in Fatimid Egypt, who developed a system of repeatable experiments to explain and demonstrate the principles he was studying. It was groundbreaking stuff.

Technology also has its roots in Ancient Greece, but was always seen as something different. The word itself means “the study of skill”, the emphasis on the craft necessary to take learning and make a new gizmo or gadget. Where science formalized inquiry, technology formalized the development of innovation. Technology also went through considerable development since ancient times but has never been formalized to the extent that the scientific method has. Interest in technology as a force that shapes our world was not heavily studied until the 20th Century, with the most popularly accessible analysis of the processes arguably James Burke’s seminal “Connections” series.

It is popular to believe that science provides us with answers about our world, something as clear as 2+2=4. This view convolutes the important differences between science and technology, which brings up an analogy by way of a joke.

Ideas usually come to those who are busy working, actually.

One of my favorite jokes as a practicing research engineer was that 2+2=5 for large values of 2. It’s not idle schtick. Suppose you have a molecule that you want to measure the concentration of, and the device you have for doing this shows you two forms that have to be added together – say 2.4 and 2.4. If the accuracy of the machine that allows you to peer into the world of this molecule is a bit questionable, you may only have one “significant figure” you can say is important. Most people would write down the two results from the machine as interim results, add them together, and then round off the total as 5. The “correct” answer”, however, is that you should round each result before you add them, but that doesn’t always happen in an Xcel spreadsheet.

A true scientist, however, is more curious than that. The most “correct” answer to an inquiring mind is to write down “4” but to keep the possibility of 4.8 in their head. If time allows, the logical next step is to inquire into that next digit and wonder what it would take to improve the accuracy of the machine to two significant digits.

To a scientist every result is only another question waiting to be answered. To an engineer or a technologist, the “right” answer is 4 and there’s no point in being silly.

This problem is much deeper than simply applying new knowledge to crafting new gadgets that improve our lives. Science in public policy has become a political issue in very key areas such as teaching evolution and the potential for global warming. The latter is an example where very important questions about how much humans can change the world were rendered into clearly observable data and then built into a model that makes further predictions into the future. This points to a problem that needs to be solved.

It is much more akin to “troubleshooting”, the way of life that is the technological cousin to the insatiably curious mind of a scientist.

“Unless”

In public policy there is no time to run the experiments through and wait for terrible consequences. The curiosity made into formal inquiry is not useful as the new information gained requires action. The process of science has to be left behind to a certain extent, becoming something much more like technology. The “skill” in this example is crafting public policy that heads off disaster.

Politics, however, can use the questioning mind of science to introduce doubt. That devolves quickly into a different kind of political craft, one of increasing power.

What matters most is the point at which a something allows a new observation about a part of the world to be seen as never before. A magnifier that reveals the tiny workings of a bug on a delicate leaf is new information not experienced firsthand before. Whether this leads us naturally to ask questions or state new facts, or some combination of the two, is something that comes out of the human mind at the other end of the glass. Both are useful in their own ways. But each has its own formal processes and perspectives that are best understood at their essence if we are going to create a fair representation of what is going on – and not force our own perspective or opinion on the situation.

For its part, the bug was happily crawling along until some big lunkhead disturbed it. It is always good to remember at least that.

Filed under: People & Culture]]>http://erikhare.com/2015/03/25/technology-science/feed/12wabbitoidPlato-AristotleIdeas usually come to those who are busy working, actually."Unless"Flak Over Frackhttp://erikhare.com/2015/03/23/flak-over-frack/
http://erikhare.com/2015/03/23/flak-over-frack/#commentsMon, 23 Mar 2015 01:28:19 +0000http://erikhare.com/?p=6579]]>There is probably no more contentious issue at the crossroads of politics and technology than hydraulic fracturing, or fracking. The process, where oil and gas drillers chew up rock deep in the earth, is responsible for the major oil boom that produced so much oil it collapsed into the current bust – with very low oil prices. It also creates a lot of environmental damage and, as a relatively new technology, is remarkably unregulated.

New rules were introduced for fracking on federal land on Friday by the Bureau of Land Management (BLM). Eagerly awaiting them were the drilling industry and environmentalists, both of which had a big stake in the regulations. If you are a long time follower of these procedures, or simply a cynic, it might come as no surprise that both sides are unhappy.

A frack well tower in Pennsylvania. The reach of one of these may radiate out for miles.

The new regulations cover only wells sunk on federal land. This is still a big deal because the cover the majority of new holes in the ground, given that most private land was tapped long ago. It is unclear if they will become a standard for the whole industry as a result, but they could if the Environmental Protection Agency (EPA) gets into it.

What has been handed down for regulation is a very simply standard based primarily on disclosure. Each well has to list what has been put into the ground in the process of fracking. There are really no new limits placed on what can be used or how the fracking is done.

Interior Secretary Sally Jewell introduced the new rules. “Current federal well-drilling regulations are more than 30 years old and they simply have not kept pace with the technical complexities of today’s hydraulic fracturing operations,” Secretary Jewell said. “This updated and strengthened rule provides a framework of safeguards and disclosure protocols that will allow for the continued responsible development of our federal oil and gas resources. As we continue to offer millions of acres of public lands for conventional and renewable energy production, it is absolutely critical the public have confidence that transparent and effective safety and environmental protections are in place.”

The Fracking Process.

The Western Energy Alliance and the Independent Petroleum Association immediately sued to block these new rules. They claim that it will add $97k to the cost of each well, even through the BLM puts the tab at $5.5k. The difference is vast.

According to the suit, “BLM’s final rule is both substantively meritless and the product of a procedurally deficient rulemaking process.” It details how the BLM’s proposal does not attempt to govern any aspect of the hydraulic fracturing process. It also claims that the rules do include new regulations imposing administrative impediments that the plaintiffs claim will complicate and frustrate oil and gas production on federal lands.

Environmental groups were hoping for a lot more. “We owe it to our future generations to protect the land that was put aside for the public good,” said Congressman Mark Pocan. (D-WI) “Regulating fracking still risks accidental spills, water contamination, methane leaks, earthquakes and habitat destruction. The only way to mediate these risks is to not allow fracking in the first place.”

The “flaming tap” caused by natural gas in ground water.

Why is fracking so bad? It has three major problems. The first is that a slurry of materials designed to lubricate the cutting in very acidic conditions is injected into the ground. The second problem is that disturbing the rock often puts oil deposits in contact with ground water and sometimes even getting natural gas into the water – resulting in the famous “flaming taps” in some places. Lastly, the water comes out of the ground, often in greater volume than the oil, is heavily contaminated and must be processed. The new rules really do not address any of these concerns.

Existing state laws do cover the release of water and the quality of ground water, but vary dramatically. Environmental groups, when not calling for a complete end to fracking, would like to at least see tough standards applied nationally.

Once they stop drilling new wells, the price can only go up.

If the new rules are so weak, why is the industry so opposed to them? In the course of the lawsuit they will have to document why they think the cost of compliance is so much higher than the BLM does, so that remains open at this time. I personally believe there is more to it. As a new technology, fracking has an air of “trade secrets” in the content of the fracturing fluid used by each operator. A disclosure based standard, like the one introduced, requires them to tell the world just what they are using, which may reveal things they don’t want the world to know.

That’s not because they are evil and uncaring, it’s because they think they have a technological edge over the competition.

Can fracking be done safely and cleanly? Major improvements have been made in regulation that have put an end to the “flaming tap” problem and held drillers accountable for that damage. The waste water can be cleaned up before being released. While the new rules don’t regulate the chemicals used to in the fracking process, they are a step towards understanding what is used a bit better overall.

It’s always been about the black stuff.

All of this will make fracking more expensive, for sure. Just how expensive will be discovered through a lawsuit. But given that federal land that may not be an issue.

Wells drilled on federal land come after a bidding process, where drillers pay the government for the right to operate. If the cost goes up, the value of the well goes down, and logically the bids should drop as well. It should come out in the laundry – outside of how hungry small operators with a belief that they have an edge are and how wells staked they are with the cash necessary to make it happen.

The new regulations, which pleased no one, are far from a big change in fracking. But as this plays out we may yet learn a lot more about how fracking is done and how it can be regulated. As always, good regulation starts with a disclosure standard first. The BLM may be catching flak over their frack, but this is a good start. It’s a process, not an event.

Filed under: Money, Nooze, Politics]]>http://erikhare.com/2015/03/23/flak-over-frack/feed/18FrackWellwabbitoidA frack well tower in Pennsylvania. The reach of one of these may radiate out for miles.The Fracking Process. The "flaming tap" caused by natural gas in ground water. Once they stop drilling new wells, the price can only go up.It's always been about the black stuff.Whither, Oil?http://erikhare.com/2015/03/20/whither-oil/
http://erikhare.com/2015/03/20/whither-oil/#commentsFri, 20 Mar 2015 00:01:43 +0000http://erikhare.com/?p=6572]]>There is little more important to the US economy than the price of oil. In the last year, about $500B of gasoline alone was sold at gas stations across the nation, with another $180B in other fuel oil – about 3.9% of total GDP.

Despite its importance, no one is willing to predict where the price of oil will be in the future. The Economist said “If your correspondent could forecast that, he would be on a yacht reading The Economist rather than at a desk writing for it.” Indeed. It seems like a task for an idiot to even try, as Barataria has several times in the last year. We were so wrong about it that it might make sense to bet heavily in the opposite direction.

Low oil prices appear to be here to stay, at least through the year. The implications are worth talking about, even if we can’t be sure what happens after that.

Demand for oil didn’t rise as fast as expected, so supply got ahead of it.

The problem that oil has is not so much a glut in output, although in 2014 the US tapped enough to steal the crown for top producer spot. Our 11.75M bbl/day is more than number two Russia’s 10.93M bbl/day and Saudi Arabia’s 9.52M bbl/day. But consumption is down for many reasons, including a general slowdown in China and Europe and improved conservation in the US.

This has given rise to the largest number of days’ worth of stored crude inventory since 1985, now standing at nearly 30 days worth. It’s spiking upward, too, suggesting that we can expect it to top the record 34 days very shortly. The signs are all for even lower crude oil prices in the near future.

West Texas Intermediate (WTI) oil, a benchmark grade, over the last year in $/bbl. Chart by the St Louis Fed.

What can possibly put a stop to the collapse? Two things stand out immediately. The first is that oil companies in the US are laying people off at a rapid clip, with over 100k jobs lost already in major drilling operations – about 10% of the entire workforce. Layoffs are expected to continue through the year as new wells are simply not being sunk.

The Fed Open Market Committee, which sets interest rates, set off a lot of speculation by removing the word “patient” from its interest rate forecast for the year. When pressed to give her best Alan Greenspan impression at the news conference afterwards, she told us, ‘I am no Alan Greenspan’. Actually, she said, “Participants are now seeing more slack in the economy than they previously did,” which is to say that there may be reasons to raise rates in the future but not now.

Low gas prices make people happy.

Why not now? There is no inflation at all and we have to see how this affects the job market. Lower gasoline prices do help everyone else, with more money in their pocket after filling up, but given that we can’t predict how long it will last we can’t predict an awful lot about the direction of the economy anymore.

In the short term, however, there is no inflation – and cheap oil is the main reason.

One feature stands out as a simple observation regarding the pump price of gasoline here in Minnesota. A year ago, you could predict the price of gasoline by taking the price for WTI grade oil in $/bbl, and applying the formula WTI /(42 gal/bbl) + $1.00 = [Pump Price]. The extra dollar was the sum of refining, transportation, retail, and taxes. That seems to have gone up to $1.20 today, meaning that either the refiners, retail stores, or more likely both are making a little more on the stuff.

Once they stop drilling new wells, the price can only go up.

While we can’t say much about the future of oil, we do know that everyone from the Federal Reserve to big drilling companies is counting on the price staying low for some period of time. It’s the only bet that anyone is making in the field right now, and it seems like a reasonable one.

The biggest threat, aside from US jobs, will be to US energy independence if we do indeed cut back production before we see a rise. This may be a good time to step back a bit and invest in the infrastructure necessary to transport and drill safely and cleanly. By the time you read this the Obama administration may have announced new rules for fracking that could clean up the operation. The drillers will squawk, but a pause in production will make cleaner oil easier to implement.

Where is oil going? The next time we talk about a US oil boom is likely to be a long time from now. But maybe we’ll be well ready for it this time and do it right. Meanwhile, all bets are off on oil prices beyond 2015.

Filed under: Money, Nooze]]>http://erikhare.com/2015/03/20/whither-oil/feed/13oilwabbitoidDemand for oil didn't rise as fast as expected, so supply got ahead of it.West Texas Intermediate (WTI) oil, a benchmark grade, over the last year in $/bbl. Chart by the St Louis Fed.Low gas prices make people happy.Once they stop drilling new wells, the price can only go up.Smaller Government, Peaceful Governmenthttp://erikhare.com/2015/03/18/smaller-government-peaceful-government/
http://erikhare.com/2015/03/18/smaller-government-peaceful-government/#commentsWed, 18 Mar 2015 00:01:04 +0000http://erikhare.com/?p=6564]]>“Get government off our backs!” It’s a chant we’ve heard a lot of over the last few years, usually in the deep, gruff voice of those old enough to remember the heyday of our parents and grandparents. It’s a call to a simpler time when there was less government, less taxation, and more to go around. At least, that’s the story we are told.

But an analysis of the size of our Federal Government as a share of the economy shows that while it is a shade bigger than it used to be, it’s way below its maximum. There are peaks in Federal Government size which fit not to an increase in social benefits or productive spending, but the very expensive line item that has been pricey enough to bring down governments and cultures for centuries – war.

In short, it’s time for the progressive left to embrace “smaller government” of a kind and to show that world that peace is not idealistic but practical.

It all starts with this simple chart below. This is a graph of total Federal Government outlays divided by the Gross Domestic Product (GDP):

Total Federal Outlays as a share of GDP, data from St Louis Federal Reserve

Total outlays includes everything, including off-budget items like the Afghan War and Social Security. It doesn’t take into account deficits or anything else – this is how much the Federal Government is a part of the total economy.

Overall, in the last 65 years, it averages out to 19.1% of the economy. It does seem to be generally climbing, having run 18% through the 1960s, 20% in the 1970s, and up to 22% in the 1980s before falling below 18% in the Clinton years. At the start of the Managed Depression in 2000 it gradually rose to 19% before spiking. Trend or not, it is the peaks within any possible rise which correspond to particular events:

Year

Event

1952

Korean War

1968

Vietnam War

1974

Recession

1982

Military Buildup

1991

Gulf War I

2008

Two Wars + Recession

All this stuff is expensive.

Of the six distinct peaks, 4.5 are definitely due to war or military buildup. The “OPEC Recession” of 1974 was a big one, depressing GDP badly. The big spike, to 24% of the economy, was due to the Afghan and Iraq Wars along with a bad downturn.

Since that time it’s come back down to 20%, which it should slip under in 2015. But what would it take to get it back down to the average, or even that fabled golden era when our Grandparents ran the show?

Given that military spending explains 75% of the spikes, it’s worth further analysis. Barataria gave this a good look back in September when the ISIS/ISIL crisis called on us to be the Global Policeman, again. When you look at our defense spending (not counting Homeland Security, military aid, etc) with respect to the rest of the world, it’s horrifying.

Police the world? Maybe. Isn’t the real competition in the global market?

We spent $685B on defense in 2012. While it’s down to $585 in 2015, it’s still quite a bit larger than the share that our GDP would suggest, compared to other nations. It’s hard for us to justify more than $397B, which is to say $188B less than we spend today.

That amounts to 1.1% of GDP. Where we spent about 20.1% in total Federal outlays in 2014, if we only had the defense outlays of an average nation we would have been at 19.0% – just under the 65 year average.

The first question when anyone proposes a decrease in defense spending is always, “Won’t that leave us weak and unable to defend our nation?” You can always say that more is good in any debate, but it would remain true that even with drastic cuts like this our close allies (Europe, Japan) would combine with us for a solid two thirds of all Defense spending around the globe, down from three quarters. We’d still spend twice as much as second-place China.

Now, there are always those who want to spend even more on defense. The latest Republican budget calls for a small increase in defense spending from today’s reduced level. But it’s worth noting that Obama produced a budget for 2016 that would have a deficit of only $380B. A reduction of just under $200B would leave that at a paltry $180B or less than 1% of our total GDP – and well within shouting distance of the last time we balanced our budget, in the Clinton years.

We can expect a lot of shouting first, however, so shouting distance is rather vast.

What keeps the global economy keepin’ on.

No matter what, we can see that the total Federal Outlays as a share of the economy has already fallen a dramatic 4% under President Obama. As the economy improves we might expect that share of the economy to continue to decline – unless Social Security payouts to retiring Baby Boomers accelerate faster than the economy itself after 2017. 2016 may represent the bottom in size of total Federal Government if we’re not careful.

It’s also worth noting that in 2012 the total take of state and local governments excluding what the Feds provided was 13.1% of GDP, 8.8% of that in taxes and 4.2% in fees (such as tuition, hospital bills, etc). The total size of government in the US is about 33% for those of you who keep track of this, but between all levels only 25% is in taxes.

Want a smaller government? We do have a lot to learn from the 1950s and 60s. The answer is a simple one – peace. Armies, ships, and planes are expensive and have always been the single largest reason our Federal budget has grown. Reducing it back to a level simply consistent with the rest of the world would give us a budget that even Eisenhower would recognize.

That may not be what “conservatives” really want, but if the call is for smaller government it is the only answer. Peace is the path to prosperity, which is to say that calling on the bravest young people to solve all our problems with their blood and sweat is a very, very expensive way to go about it. This is true while saying nothing about the morality of our military machine, leaving it up to an entirely pragmatic analysis of historical facts.

Filed under: Money, Politics]]>http://erikhare.com/2015/03/18/smaller-government-peaceful-government/feed/26070331-A-0497K-009wabbitoidTotal Federal Outlays as a share of GDP, data from St Louis Federal ReserveAll this stuff is expensive.Police the world? Maybe. Isn't the real competition in the global market?What keeps the global economy keepin' on.Capital Ideahttp://erikhare.com/2015/03/16/capital-idea/
http://erikhare.com/2015/03/16/capital-idea/#commentsMon, 16 Mar 2015 00:18:34 +0000http://erikhare.com/?p=6560]]>It was 70F in St Paul today, and my mind is on other things. This repeat from 2013 is still good, but the numbers have changed slightly since it was written.

Borrowing money isn’t bad. When it’s used to purchase something big that will last for years, like a house or a car, it often makes sense to do it now and pay the finance charge. Borrowing to buy equipment or a build to be rented is an investment – as is borrowing money to learn a good trade.

When we look at how the Federal government borrows to keep itself going we can and should be able to ask the same questions – was this an investment? Did we get anything good for the money? Unfortunately, the accounting practices used by the Feds lump capital and other investment into the same pot as operational expenses, making it impossible to tease everything out. It’s a procedure the Founding Fathers would recognize, if you wanna get all Tea Party on the practice. But it’s still a dangerously stupid way to run things – and totally counter to the way any business or state is run.

As we talk about the need for serious reform in Washingtoon, we should add this to the list.

The importance of this separation cannot be over-emphasized. It’s been a long time since there was a genuine call for a balanced budget, but the forces of austerity are running pretty strong in the US House. Their point that too much Federal borrowing chokes out investment in the rest of the economy is well founded, if a bit wrong given where we are as we emerge from a Depression. The massive tab run up was key to the management of this Managed Depression and keeping the worst from happening.

But for those of us who would rather shout down austerity, what can we point to? As a strong supporter of the Simpson-Bowles framework for deficit reduction I have to say that yes, I would like to see some evidence that our spending is under control – even as a deficit is clearly necessary. But some spending is clearly more effective than others for getting us through the rough patch, and chief among that is spending on infrastructure. It has a positive return, promotes equity, and gets money into the hands of people that need it the most to get things moving – working people.

Borrowing to build infrastructure is also something that can easily be justified. It’s an investment.

Balancing the budget isn’t actually in the Constitution.

The problem is that the budget ,or lack of one after years of continuing resolutions, is a mess. It’s nearly impossible to tease out the real investment contained within the budget. The last good analysis I found was from the Brookings Institution in 2008, and it’s rather sickening. It takes data from the Congressional Budget Office (CBO) that is otherwise really hard to find.

Total “investment” in the budget – including big defense items, infrastructure, research, and support for schools – is about 15.5% of what the Feds spend (now about $3.6T). The part that is non-defense physical investment is about 3.3%, and infrastructure is a paltry 2.2% – which is currently about $80B. President Obama has called for more infrastructure spending, but it’s still a pitifully small part of the budget. That’s even after a small but decent one-time bump of $47B in 2009.

Construction Jobs are always a good thing. There’s stuff to build.

This seems like a really stupid time to call for a budget balancing amendment, and I’m not exactly going that far. But it seems reasonable that while current expenses can be relatively balanced capital projects are something very different – and we can reasonably borrow many times what we spend now while easily justifying it. Rates are low, unemployed people can be paid a little less, and costs are generally low. Why not build like all Hell right now, before it all gets expensive? That it helps the economy rebound is almost a secondary effect.

But no, we don’t account like that. And genuine capital improvement languishes at the bottom of the heap, a tiny line item in a very big budget. That’s when anyone bothers to separate it out at all.

The point is that Simpson-Bowles would be a great start for creating a budgetary system that many of us could actually understand while getting ahold of a dangerous trend towards increasing debt. But where we could reasonably continue to spend to help end the Depression is both easy to define and very easy to separate out – if only we used accounting techniques used by just about every other organization anyone can think of. That we don’t do this is a terrible crime and just one of the many ways that our system is hopelessly antiquated.

Yes, let’s keep borrowing money! But let’s also keep track of what we are getting for it, too. That’s the compromise that we should be working towards. It’s the only good answer I can come up with for the dangerous cries for more and more austerity as the only answer to a budget that really is out of control.

Filed under: Money, Politics]]>http://erikhare.com/2015/03/16/capital-idea/feed/26wabbitoidusedcarBalancing the budget isn't actually in the Constitution.Construction Jobs are always a good thing. There's stuff to build.New Season, Old Storieshttp://erikhare.com/2015/03/13/new-season-old-stories/
http://erikhare.com/2015/03/13/new-season-old-stories/#commentsFri, 13 Mar 2015 00:47:04 +0000http://erikhare.com/?p=6556]]>If we learned one thing this week in Minnesota, it’s that if you wait long enough something’s gotta give. Spring arrived this week and the air nearly sizzles with wet and warmth and life. As it always is, something had to happen eventually.

Everywhere except Congress, of course.

But aside from the entertainment we get from “leaders”, there are other sources of news. Here are three stories Barataria has been all over which had interesting developments in the last week.

Pope Francis

Pope Francis has always been a good newsmaker, but he hasn’t gotten much attention lately as we all wait his new encyclical on the environment. Given the church calendar, it probably has to wait until after Easter at this point.

But there have been a few rumblings about what we can expect from it. Cardinal Peter Turkson, head of the Pontifical Council for Justice and Peace and the apparent main author of the encyclical, had a few hints. He explained that the new work will build on the previous work, Evengelii Gaudium, which directed the faithful to work for an economy based on people, not money.

It will “explore the relationship between care for creation, integral human development and concern for the poor,” according to the cardinal. The Pope will seek to bring the “warmth of hope” to the wider debates on climate change and development, he said, while steering a path away from the “Herods” and “omens of destruction and death.”

The Pope himself did say something interesting while visiting his native Argentina. Noting that they have an election this year, he said “In the financing of electoral campaigns, many interests get into the mix, and then they send you the bill.” His solution? “Perhaps public financing would allow me, the citizen, to know that I’m financing each candidate with a given amount of money. Everything needs to be transparent and clean.”

Not quite throwing the money changers out of the Temple, but close.

The image that launched “Texts from Hillary”. She’s at her best looking bad-assed.

Speaking of money for campaigns, Hillary Clinton’s email server is an issue that won’t go away. This is bad news for Sec. Clinton, of course, but the path that we took to get here is fascinating. We can never forget that this is a mutation of the Benghazi Committee which is chasing down every single communication she ever wrote or received, waiting to comb over all of them for …. well, just about anything.

The problem with this story, if you’re Clinton, is that it won’t go away. It won’t go away because there are actually very serious issues with State Department material placed on an insecure server, clintonemail.com, which hackers are now circling.

Of course, all of this attention comes to her as a challenge to her presidential inevitability, which Republicans and more than a few Democrats are eager to torpedo. Is it a big scandal? Of course not, but everything involving the heir-apparent is a big deal. Just ask Prince Charles.

The problem for Clinton is, as it was in 2007 or so, her inevitability. Her ability to manage it in 2015 is not much better than it was eight years ago because she has not been able to make this go away. Consider this her first big test of the campaign – and so far she isn’t exactly passing. But, as we all know, time passes and so may she one day.

We could say “stay tuned to Hillary,” but you probably have no choice but to do so.

ISIL on the march. Yes, these monsters must be stopped.

The last story is a strange one that perfectly illustrates why the key to evaluating the flood of information on the ‘net is to seek the source of the information you are presented with. This is a story that requires some explaination, so bear with us.

Among conspiracy minded people on the far left and right, the ISIL/ISIS/IS/Daesh story is one that the US and perhaps Israel created. Given that the US has inserted itself back into the Middle East and chaos has ensued, Yankee Imperialism(tm) has been the clear victor so far in the whole fracas. The Hinsight Conspiracy types have long looked for a clear connection between the rogue group and shadowy agents with an interest in chaos.

That may sound utterly ridiculous to you, and it is to most people. But many sites on the extreme recently ran with a story that Iraqi militia had captured CIA and Mossad (Israeli intellegence) agents when they over-ran an ISIL position. It was a short story without a lot of detail that fed directly into the conspiracy theorists’ darkest beliefs.

Where did it come from? The version of it with the earliest publication date (7 March) is on the website of Tasnim News Agency, which is run by the government of Iran. It says that it got the story from “Sama News Agency” in Iraq – but there is no record of any such news organization anywhere. It may exist, but it has left no fingerprints on the ‘net so far. There is not even another article or wikipedia entry mentioning it.

So what is the original source for this story? Apparently, there is none. It appears that the conspiracy theorists are being fed directly by the Iranian propaganda machine – which is happily giving them just what they want.

Seek the original source, everyone. For a clear, cold drink of truth there is no substitute.

These are just three stories that seemed to deserve an update as the northern hemisphere slowly drips its way towards Spring. There may be more updates worth reporting, but they make for a light update on a day when we’d all rather be outside.

Filed under: Nooze, Politics]]>http://erikhare.com/2015/03/13/new-season-old-stories/feed/28wabbitoidPope FrancisThe image that launched "Texts from Hillary". She's at her best looking bad-assed.ISIL on the march. Yes, these monsters must be stopped.Grandstanding, not Governinghttp://erikhare.com/2015/03/11/grandstanding-not-governing/
http://erikhare.com/2015/03/11/grandstanding-not-governing/#commentsWed, 11 Mar 2015 00:01:48 +0000http://erikhare.com/?p=6544]]>Unpatriotic! Unconstitutional! Treasonous! Illegal! The reaction to the letter signed by 47 Senators telling Iran that any treaty signed will be un-done in two years was swift and brutal. Some of the harshest condemnation came from those who oppose any agreement with Iran, too, so it wasn’t just Democrats this time. But was it really all those things that have been alleged?

The short answer is that today’s popular media always hyperventilates, so something this unprecedented had to test the limits of hyperbole. Sorry, this blasted through the stratosphere of outrage! But the real problem isn’t this one action, which we can be sure our foreign policy and our democratic-republic will survive. What is more troubling is the new standard set for obstruction and grandstanding that tells us nothing, absolutely nothing, is going to be accomplished in the next two years.

Sen Tom Cotton (R-AR). Yes, he is that wet behind the ears.

We have to start with how this became a news item in the first place. Sen Tom Cotton (R-AR) is not just a rookie, at 37 years old he’s barely old enough to be a Senator in the first place. He apparently circulated the letter to his more experienced and august colleges who promptly signed onto it, which gives us the first odd thing at the heart of this sorry event.

I may not be an expert on Senate protocol, but I’m fairly sure that in the past the (very) old men of the Senate would have laughed at the gumption and moxie of this young feller and told him how things are done in the protocol-bound Senate. But in 2015 they didn’t. All the Republican senators except seven, including all of the leadership, signed on.

It is leadership which lies at the heart of this question. Barataria asked in November, when the Republicans took the Senate, if they were going to govern or lay low and take pot-shots at Obama. We know the answer now, and it has nothing to do with a choice made by the leadership.

When I say I’d like to reform the tax code, I’m lying. This is what I want to do with it.

Now, as a Democrat, I should be happy that they are incapable of doing anything. What would happen if they actually passed a balanced budget, for example? Given that they haven’t passed an actual budget of any kind in the House since the Republicans took over there is little to fear that this could happen.

But that’s not good enough. I’m an American first. I see the massive amount of reform needed in our tax code and our inability to audit the Pentagon as we sweep it all under the carpet for the next generation to deal with as debt and I frankly get angry. It’s not a partisan anger about the direction of things, it’s a practical anger at the directionless incompetence displayed.

These little fits of machismo demonstrate what the real problem is, it seems. There is no reward for actual work being done – Hell, if anything, a legislative record is a liability as accomplishment only makes you enemies. We live in a time made for grandstanding without a cause led by rebels without a reason. Shouting past each other is given as a substitute for running the nation somehow.

It’s a bit much to call it treason, but it was dumb. And this is a paper that is against negotiating with Iran.

It goes without saying that Iran is far from popular, as Barataria demonstrated just last week. While peace is obviously desirable, Iran’s track record for mayhem has made them the enemy not just of the United States but truly the enemy deep in the hearts of the vast majority of Americans. That’s why Obama’s response, that the Republicans had formed an alliance with the mullahs of Iran who also take a hard line and resist peace, was perfect.

But it became even worse when the Iranian Foreign Minister, Dr. Javad Zarif, took the opportunity to school the Senators in both international and US law. Yes, this little episode only managed to make Iran look like the sane one in the whole process, which doesn’t help either the hawkish or the dovish side.

Which gets us back to the real problem on display here – there is no leadership. The young guy with what “feels like” a good idea is able to cow elected “leaders” in name only into going along with something that should have seemed like a really stupid idea to anyone who could ever claim to be a “statesman”. Apparently, there are only seven such Senators in the ruling Republican caucus.

That’s what is truly pathetic about this sorry episode. It’s not treason or anything like that which hurts the US, it’s the willful, deliberate incompetence wrapped with high-volume grandstanding.

Filed under: Nooze, Politics]]>http://erikhare.com/2015/03/11/grandstanding-not-governing/feed/23wabbitoidSen Tom Cotton (R-AR). Yes, he is that wet behind the ears.When I say I'd like to reform the tax code, I'm lying. This is what I want to do with it.It's a bit much to call it treason, but it was dumb. And this is a paper that is against negotiating with Iran.The Original Sourcehttp://erikhare.com/2015/03/09/the-original-source/
http://erikhare.com/2015/03/09/the-original-source/#commentsMon, 09 Mar 2015 00:01:30 +0000http://erikhare.com/?p=6535]]>The internet is a wide, rolling river of information. It can be treacherous and dangerous to wade into if you’re not careful. If you’re looking for a cool drink of truth, the muddy brown of this mighty Mississippi of data often has a harsh stench of bias bubbling along with the waves. What can a reader thirsty for knowledge do?

The answer is to seek the source – the cool, clear stream that feeds into the torment at the headwaters. I call it the “Urquelle”, a German word meaning “original source” favored in the mountains and rolling hills that are the source of so many great rivers in Bavaria and Bohemia. This process of seeking out primary sources is valuable not just for writers, for whom primary sources have long been a staple of good, useful prose. As surely as reading is writing, today’s discerning reader should also seek the Urquelle.

Lake Itasca, the source of the Mississippi River. The water is cool and clear.

Many big stories take on a life of their own on the ‘net. The process works through and around the mainstream media where people are paid money for the purpose composing a story into useful information. Sometimes their sources are eyewitnesses or original documents found on the internet. But people often take off from the professionals, adding their own comments before sharing the story on social media. These might feed back to the mainstream eventually.

Information strays away from the truth for many reasons once it leaves the primary source. A professional writer may not have time or space to say everything they need to. People with one perspective may use what they find to push one part of their agenda, even as propaganda. Without the Urquelle it’s hard to tell just what potential problems there are.

To use one example, the situation in Ukraine is an important story that has many people’s attention. But the Urquelle for much of the information is not originally in English and very far away from people in the US. That doesn’t stop people from offering their own comments and perspectives to secondary sources and hear-say despite some obvious difficulties.

The flow of information from Ukraine quickly becomes as rolling and brown as the Dnieper River flowing past Kiev.

The recent protests in Kiev. Note the blue and gold flag of Ukraine alongside the blue with gold stars of Europe.

In order to make sense of one aspect of the story, I went back to the moment when the protests started on 21 November 2013, which was when a treaty with the European Union was rejected. It is the “Deep and Comprehensive Free Trade Agreement“, negotiated over many years of conferences and drafts. What was in that treaty? I pulled up the original source, the treaty itself and the conferences that shaped it. They all talk at great length about establishing the “rule of law” in Ukraine.

Those sources served as the Urquelle for one perspective that has to be illuminating, even from very far away. And, more to the point, it is one that has hardly ever been discussed in the mainstream media.

Another story from Ukraine has been harder to trace down, but it shows how stories mutate like genetic modification – which is the bread and butter of this story quite literally.

Many big stories like this look very different from the original source. Before anyone jumps to conclusions, it’s best to see if there is an original source that backs up the claims of any given site on the ‘net. That has to start by determining if there are any primary sources in an article. If there aren’t, it’s probably not worth repeating.

Stories like that often make their way back to the mainstream, too, so it’s not just blogs which you have to watch carefully.

Another good example of stories that take on a life of their own are polls, a subset of scholarly work that might have many potential conclusions buried in a mountain of data. Many people like stories based on polls because they have the allure of hard, scientific fact. But the very least you have to expect is a link back to the original report on the data. A statement about how valid it is reported to be is also important, especially when a difference noted is within the margin of error. Without the original source, the validity of a poll cannot be verified and it should never be taken as some fact, despite the allure.

We are all writers, of a sort.

Good writers have long looked for primary sources. But in today’s internet world links are shared by readers on twitter and facebook, and are often further amplified in blogs. If you share a story without the Urquelle, you are contributing to the mud in the great river of information.

What is the Urquelle to a reader, writer, or sharer on social media? It is nothing less than the cool, clear original source of information. It can be a scholarly article, an eyewitness account, or a big long treaty. It may be a mountain of data or a properly formatted chart that includes where it came from.

In any case, the original source should be used whenever possible. Without that Urquelle there is little available for the seekers of truth to navigate on the rolling muddy waters of a big story flowing through the ‘net.

Filed under: Nooze, Writing]]>http://erikhare.com/2015/03/09/the-original-source/feed/18Lake_Itasca_Mississippi_SourcewabbitoidLake_Itasca_Mississippi_SourceThe recent protests in Kiev. Note the blue and gold flag of Ukraine alongside the blue with gold stars of Europe.Threshing wheat in Ukraine. It's still non-GMO by law to this day.fountain_penIranian Ambition, the Great Chessgamehttp://erikhare.com/2015/03/06/iranian-ambition-the-great-chessgame/
http://erikhare.com/2015/03/06/iranian-ambition-the-great-chessgame/#commentsFri, 06 Mar 2015 00:05:05 +0000http://erikhare.com/?p=6525]]>Netanyahu’s tone was measured and direct, fitting the prestige of the chamber he was addressing. “That deal would not prevent Iran from developing nuclear weapons — it would all but guarantee that Iran gets those weapons, lots of them,” he told Congress last Tuesday. It was classic Netanyahu in many ways – bold, dire, and ultimately a load of cowpuckey.

Netanyahu can’t claim to know what is happening in the “P5+1” talks to stop Iran’s uranium enrichment program, and if he does know he can’t prove it publicly. These talks have been going on for nine years now and have always hinged on one sticking point – Iran cannot obtain nuclear weapons. Any other result would have made the talks much easier and they would have been over by now. But these are important talks for reasons even larger than weapons of mass destruction.

Hassan Rouhani, President of Iran. He is not a reliable bogeyman, but can we go as far as to make peace with him?

Iran was brought to the table to discuss its nuclear ambitions by one very nasty reality – the regime of sanctions against it are by far the most crippling ever imposed against a nation. They include a complete cutoff from the world’s bank messaging system, SWIFT, which makes any transfer in or out of Iran extremely difficult. Even North Korea has access to this system and not not been as hermetically sealed to the outside world.

To be fair, it has been alleged that the Obama administration effectively relaxed sanctions by not pursuing leaks that allowed some money to flow in and out of Iran as long as they remained at the table, but this is hardly a “lifting” of the sanctions.

These sanctions are backed by a long litany of UN resolutions and the complete confidence of the US that one thing can never happen – Iran cannot obtain nuclear weapons. No matter how desperate the situation becomes in Iran the seal around it has never been called into question by anyone. No matter how much the talks have dragged on Iran has always been monetarily, diplomatically, culturally, and politically isolated.

That is, actually, a lot of the problem. Iran is a rogue state that is not a part of the great family of nations in any way at all.

Hamas’ core military is very small, but well armed.

The status as a pariah includes their unilateral support of Hamas, which is the only entity currently actually shooting at Israel from time to time. They also support Hezbullah and other groups that are great forces for instability, destruction, and tremendous pain in the region. Everyone in the world needs an Iran which is a normal, peaceful nation that looks after its own and does not create chaos.

That has to be the ultimate goal of talking to Iran and bringing them back into the fold.

There is a potential great benefit for Iran and everyone in this process, too. Their great reserves of oil and gas would provide them with a lot of revenue to revive their crippled economy – and provide an alternative to Russian oil and gas for Europe, which desperately needs one. It would restore a balance to a region that has shown signs of flaring up into a war between Sunni and Shi’ite Islam, a conflict that would only destroy the Moslem world and create a refugee problem much bigger than the horror that is Syria today.

The ultimate pragmatist, or just a jerk?

Long ago, the US had “The Nixon Doctrine” which held Saudi Arabia and Iran as the “Twin Pillars” of the region. Since the Iranian Revolution in 1979, the west has relied far too heavily on the Saudis for anyone’s comfort. Today, they may well be deliberately destroying US oil production and its associated jobs here in order to once again corner the oil market. One pillar apparently is not enough to support the region, especially when it is a medieval kingdom with its own modernity-defying roguish tendencies.

Can the negotiations work to eliminate Iran’s nuclear program, lift the sanctions, and ultimately create an Iran that is a force for stability and peace? It seems like a lot to ask, and frankly Netanyahu is right to be skeptical. But it is worth trying – given the resolute solidarity that nuclear weapons are not an option first.

Will the talks work ahead of the deadline on 31 March? We don’t know just where they are, but there are reasons for hope. While Netanyahu’s speech did not produce the epic failure that Barataria predicted when it was announced, they may have affected the talks themselves and screwed up the one thing that Netanyahu was adamant about. The parties at the talks are apparently more resolute than ever to make something happen.

As long as the arms catching aren’t nuclear arms … maybe?

Barataria would like to present a modest proposal to jump start the talks and work towards not just eliminating the Iranian nuclear program but actively bringing Iran back into the family of nations. It’s a trust-building exercise that would cost very little to implement but go a long way towards ending the relentless war between us.

It starts with the US apologizing for our role in the 1953 coup that toppled Iran’s democratic government, something which we only recently admitted. Once that is done and some reparations announced, Iran could apologize for the seizure of our embassy in 1979. The US would then in turn apologize for shooting down Iran Air flight 655 in 1988, with the full “body price” from the Qu’ran paid to the families. Iran would then apologize for the 1983 Beruit embassy bombing with similar reparations.

There may be other events that we should all apologize for, but these stand out immediately.

A little respect goes a long way.

Why go through this? Because there is no trust between Iran and the rest of the world, headed up by the US. There has to be to achieve the ultimate goal for these talks far beyond the nuclear program. There is a great benefit to everyone – especially Israel – if we can get as far as to have Iran stop supporting terrorist groups and fully rejoin the world.

Where Netanyahu is wrong is his belief that a hard line is the only way to go with Iran. There is nothing wrong with having a “Bad Cop” in Israel calling for this position, and perhaps that is all the Prime Minister is really doing at this point. But there is a lot for everyone beyond the nuclear weapons issue.

The world needs a legitimate Iran, and Iran needs to go legit. It’s that simple. Getting to that simple conclusion has proven incredibly difficult. But no matter what, it’s worth trying. We can all only hope the talks are successful – given the caveat that the top goal is an end to the Iranian nuclear program.

Filed under: Nooze, Politics]]>http://erikhare.com/2015/03/06/iranian-ambition-the-great-chessgame/feed/33Hassan_RouhaniwabbitoidHassan Rouhani, President of Iran. He is not a reliable bogeyman, but can we go as far as to make peace with him?Hamas' core military is very small, but well armed.The ultimate pragmatist, or just a jerk?As long as the arms catching aren't nuclear arms ... maybe?A little respect goes a long way.Payday Can’t Come Fast Enoughhttp://erikhare.com/2015/03/04/payday-cant-come-fast-enough/
http://erikhare.com/2015/03/04/payday-cant-come-fast-enough/#commentsWed, 04 Mar 2015 00:05:58 +0000http://erikhare.com/?p=6520]]>The woman ahead of us in line at the convenience store had a bit more than the impatient, bored look we all shared. She held her head high and spoke to the cashier in a friendly tone, paying for the gasoline she was going to pump. Like many people at this store, in this part of St Paul, she paid with cash – but hers came in crisp twenties slid neatly out of a bank envelope. After we paid our own way out of the line I asked my daughter if she noticed. “My guess is she just cashed her paycheck because she doesn’t have a bank account,” I told her. It was a good guess, because it turns out that more than 17% of that particular neighborhood’s households have no bank account – and many rely on the UnBank check cashing up the street.

There are many reasons people don’t have bank accounts, up to and including the fact that check cashing stores can actually be cheaper than fees on everything. But some people wind up using these places for a “Payday Loan”, or a one-month advance on the next paycheck. A recent study shows that people who do this have to take out another loan the next month to pay off the first, and so on – with 62% eventually hitting 7 or more months in a row, the point where the interest payment exceeds the loan amount.

Money when you need it! (but it’ll cost ya)

The Payday Loan industry is organized and unapologetic. On their website you’ll find a biweekly newsletter full of interesting links and fun facts. There’s also a great app for looking up the “unbanked percentage” in any target community – where I found the data above. In St Paul, for example, 8.2% of all households are “unbanked”, pretty close to the US average of 7.7%. You can also buy a chain of payday loan stores, if you’d like, and sample an impressive collection of scholarly studies on the industry.

The Consumer Financial Protection Bureau (CFPB) released their study of the industry, and the findings are more than a bit shocking. They followed “loan sequencing”, or how many times a payday loan is rolled over before it is finally repaid. They don’t include interest rates, since they vary a lot, but with fees and interest they estimate that 7 months rollover on a loan is about 100% of the original value – suggesting a net annual rate of just under 200%.

That may sound like an insanely lucrative business, but with a default rate of 20% and a lot of fees paid on the checks they handle the operations do have their costs. It’s very unclear how much is made from payday loans.

Keep digging the hole?

But for the borrowers, the results are very obvious. “This renewing of loans can put consumers on a slippery slope toward a debt trap in which they cannot get ahead of the money they owe,” CFPB Director Richard Cordray said.

Many payday borrowers live on fixed monthly incomes, such as retirees or disabled Americans receiving Social Security disability benefits. Of those payday borrowers receiving monthly payments, the study found that one out of five borrowed money every single month of the year.

“These kinds of stories are heartbreaking and they are happening all across the country,” Cordray said. “They demand that we pay serious attention to the human consequences of the payday loan market.”

What can be done about this often predatory private industry? The industry newsletters show that many states, even rather conservative ones like Alabama and Idaho, have passednew regulation on payday loans and unbanks in the last year. But the most comprehensive proposal floated yet has been to allow the Post Office to expand into more financial services.

The seal of the Postal Savings System.

It’s not a radical idea at all. There was a Postal Savings System in place from 1910 to 1967, when it was abandoned due to unpopularity. It provided basic banking services for the very poor, but it did not offer loans. The latest proposal for a postal banking system would include “small loans” of an unspecified amount at a low rate of interest.

Senator Elizabeth Warren (D-MA) is a strong backer of this system, seeing it as a chance to fix two problems at once – provide financial services without predation for the “unbanked” and have a new income stream to help keep the Postal Service solvent. But the idea has gone nowhere.

Meanwhile, payday loans are being issued with high interest and a high tendency to rollover into a debt that is twice as large as the original loan amount. At the very least it’s dangerous, but more importantly it takes money away from the people who need it the most. In some parts of my town, and yours,too, that can make a big difference for the whole community.

The woman in front of us that day looked too much like she had her life together to be someone who takes out this kind of loan, but you never know. Many people don’t have a bank account, and there’s certainly no shame in paying for everything in hard cash. I only hope that a sudden emergency doesn’t tie her to the system that can drain that cash very quickly and take that dignified, polite bearing away from her.

Filed under: Money, People & Culture]]>http://erikhare.com/2015/03/04/payday-cant-come-fast-enough/feed/15diggingwabbitoidMoney when you need it! (but it'll cost ya)Keep digging the hole?The seal of the Postal Savings System.Fed Raising Rates …. When?http://erikhare.com/2015/03/02/fed-raising-rates-when/
http://erikhare.com/2015/03/02/fed-raising-rates-when/#commentsMon, 02 Mar 2015 00:05:12 +0000http://erikhare.com/?p=6511]]>It’s been nearly a year since Janet Yellen, in her first testimony press conference after a Fed Open Market Committee (FOMC) meeting, told the world just what she was looking for before raising the Fed Funds Rate (and everything that rises along with it). The openness was remarkable for a Fed Chair and a sign of a new era as a woman took control of what is arguably the most power job in the world.

It’s gonna be allright … Janet Yellen when she was introduced to the world in 2013.

The five elements that Yellen discussed were not the most important figures in the economy generally. She chose measures which have been stubbornly lousy through the Managed Depression on purpose. While things have been looking good for some people, others are clearly being left behind. Yellen made it clear – the Fed under her leadership isn’t going to let that happen.

That’s why we have such unconventional measures in the dashboard. U6 unemployment is an important one, and the only measure of employment we should be using. The duration of unemployment has also been a terribly stubborn problem lately. But workforce participation and the rate at which people are willing to quit their jobs are a bit surprising. The list rounds out with growth in wages, something that is just starting to rebound.

Barataria took the liberty of putting these five together and coming up with a scale where January 2000, before the Depression started, is the absolute measure of goodness and the low point over the last 15 years is the measure of badness. Where we stand today between those marks is converted to a 0-20 scale so they all add up to 100. How has Yellen’s Dashboard performed?

Guage

2Q13

1Q14

2Q14

3Q14

4Q14

1Q15

U6 Unemployment

5.9

8.9

9.9

10.7

11.5

11.7

Long Term Unemployment

3.5

3.6

5.1

6.5

6.5

5.9

Workforce Participation

0.0

2.4

0.0

1.2

1.8

0.6

Quit Rate

5.5

9.1

9.1

12.7

12.7

12.7

Wage Growth

4.8

2.9

5.7

5.7

9.5

9.5

Total

19.7

26.9

29.8

36.8

42.1

40.5

Demand for oil didn’t rise as fast as expected, so supply got ahead of it.

As you can see, the great progress in 2014 is not continuing right now. It’s leveled off a bit and not gaining as we would like. Between that and the low inflation caused by plummeting oil prices there is little pressure on the Fed to raise rates.

But what should the Fed Funds Rate be? This is also worth an update, since a lot has improved. The short answer is that the Fed seems to use something like the “Taylor Rule” to calculate the rate, giving themselves room for a lot of fudge. This is too complicated for those of us with only limited data on our hands. In 2003, Harvard Economist Greg Mankiw proposed a simpler version that eliminated most of Taylor’s variables and produced a very simple formula:

Federal funds rate = 8.5 + 1.4 * (Core inflation – Unemployment)

You can see how that has worked since 2000 in this chart, with the actual Fed Funds Rate in red:

There are three great features to this chart. The first is the ballpark, perhaps even decent correlation before 2009. Then, the Mankiw rule dives below zero – a rate that isn’t supposed to happen without major upheaval. That marks the start of “quantitative easing” as a policy, ended in 2014, which is to say goosing the economy with a fixed amount of money rather than an interest rate. And then the calculated rate turns positive in 2012 but the actual does not – reaching almost to 3% today. This is the period of a very hot stimulus by historical measures and the time when Bernanke, and later Yellen, started looking out for workers.

Where should the Fed Funds Rate go? The short answer is that the FOMC could, and perhaps should, raise rates just about as much as they want at any time. But the measures that Yellen gave us show that the economy is not picking up steam as rapidly as she would like.

There is every reason to expect an interest rate rise this summer, but it is likely to be a small one – perhaps a quarter percent. It should be enough to get everyone over the addiction to cheap money and start looking beyond the liquidity trap that has defined investing since 2008. But that’s about all it is likely to do.

Yellen made it very clear what she is looking to see improve before rates really go up. Despite some early progress, jobs are not gaining ground as fast as they were. There is still time to see progress this year and next, into the projected end of the Depression in 2017, but despite a very hot stimulus by the Fed we are not overheating yet.

There are some technical details in this post – please follow the links for more information. Also, please vote for Barataria as “Best Weblog About Politics” in the 2015 Bloggie Awards. Thank you!

Filed under: Money, Nooze]]>http://erikhare.com/2015/03/02/fed-raising-rates-when/feed/24Yellen SmilingwabbitoidIt's gonna be allright ... Janet Yellen when she was introduced to the world in 2013.Demand for oil didn't rise as fast as expected, so supply got ahead of it.Mankiwmoney1Redefining Workhttp://erikhare.com/2015/02/27/redefining-work/
http://erikhare.com/2015/02/27/redefining-work/#commentsFri, 27 Feb 2015 00:05:37 +0000http://erikhare.com/?p=6502]]>Is technology a net creator or destroyer of jobs? The question is as old as the Industrial Revolution, when workers in mills found themselves put out of work by large industrial looms. In France, they threw their shoes (sabots) into the weaving machines to destroy them – the origin of the term “sabotage”. The protests didn’t stop the machines, however, and the workers had to find something else to do in an ever-changing economy where machines did more and more work.

Today, the pace of technological change is faster than ever, with new gadgets coming into our lives constantly. Automation is also transforming our lives, with new robots and artificial intelligence replacing workers constantly. Are today’s productivity gains tomorrow’s unemployment? Increasingly those who study technology in our lives and the popular media are coming to the conclusion that yes, workers are net losers in the race against tech. And this is not a partisan issue.

The Coke machine at Burger King. Not a huge job killer, but a sign of the future?

If you walk into a Burger King and place your order, the workers get busy putting it together. But while you wait, the person at the counter will hand you a cup for the automated Coke machine usually just off to the side. You, the consumer, use the system to select from hundreds of beverages mixed to your specifications.

It’s not a huge job-stealer as technology goes, but what’s to stop BK from taking it further? Certainly, a small terminal could take your order and payment. A machine that makes burgers isn’t hard to imagine, nor is one that makes fries. A fully automated burger dispensing store that isn’t even paid minimum wage could well be on the horizon.

The growth in productivity in postwar US was tied directly to the growth in the number of workers until 1999. Output grew at an average of 2.1% per year, as did the number of jobs. Production continues to grow at a similar annual pace, but the number of jobs has slowed to 0.5% since the start of the Managed Depression in 2000. That has rebounded lately to a net rate closer to 2.0%, but it still lags the increase in GDP – forecast to be 3.4% in 2015. As we have noted, much of the work created has not been full time employment but contract work - which has fewer guarantees and protections.

Not all robots are evil.

Is automation to blame? “Technological progress has been a big cause—and my prediction for the future is that it will be an even bigger force going forward,” says Andrew McAfee, a management professor at the Massachusetts Institute of Technology’s business school and author of the book “Race Against the Machine.” Advanced automation keeps pushing up output, he says, “but there’s less and less demand for good old-fashioned human labor.”

This goes against the trends that we’ve noted which show that workers should, if anything, become more valuable in the next few years – particularly after Baby Boomers start retiring en masse in 2017. But more expensive workers are even more likely to be replaced by machines than cheap ones. Worse, there are signs that the basic skills necessary to be a high-value worker are on the decline, according to a report by the Organization for Economic Co-operation and Development (OECD).

What a “job” used to mean for many.

What happens if there is not enough work to go around? As the Industrial Revolution progressed, one of the key features was the development of the standard 40 hour workweek. Over 100 years ago, it was common for employees to put in as much as 12 hours per day, 6 days a week, especially if they were valuable skilled workers in areas like steelworking. Unions organized and limited the hours required, giving us the weekend as we know it.

It may seem counter-intuitive, but more valuable workers are usually the first ones to organize and demand both better pay and shorter hours. A world where machines work is likely to mean that people don’t – but wages have to rise to make the difference if there is to be no decline in living standards. A 32 hour workweek (4 days) would create 20% more jobs but necessitate a 20% rise in pay to keep everything even.

This places a higher demand on basic skills and education, however, in addition to a huge social change in the nature of what we call “work”. In the Burger King example there is always a need for a manager to keep everything running and control the crowds – in addition to a mechanic that keeps the machines operating. There are still jobs for humans, but they are more technical and demanding – and the productivity per employee justifies better pay.

Workers of the world Unite – it is one big economy, after all.

But there is only one historically proven way for workers to regain the upper hand against technology, and it is organizing. Throwing your shoes into the works isn’t good enough. It takes skills and determination – and a shortage of replacements waiting for their chance.

If Barataria is right about the net shortage of workers after 2017, into the next boom, we can see how things might change from there. Robots will likely take up the slack, but workers will have to be the net beneficiaries as the relationship between people and work changes. That frees up people to have better lives, raise their kids, and continue their education – making everyone gradually more valuable and making a much higher hourly rate well worth it for everyone.

But getting from here to there is not going to be easy. This can and should be the focus of a genuine Progressive movement – to embrace the changes that are coming to free people and make robots do the work.

This article is a synthesis of many past articles and work from popular media. Follow the links for more information on any topic, and please join the discussion below. The future is a place we’re all going together, so let’s make it work for all of us!

Filed under: Money, Nooze, People & Culture]]>http://erikhare.com/2015/02/27/redefining-work/feed/26iww1wabbitoidThe Coke machine at Burger King. Not a huge job killer, but a sign of the future?Not all robots are evil.What a "job" used to mean for many.Workers of the world Unite - it is one big economy, after all.Humbling Coldhttp://erikhare.com/2015/02/25/humbling-cold/
http://erikhare.com/2015/02/25/humbling-cold/#commentsWed, 25 Feb 2015 00:05:15 +0000http://erikhare.com/?p=6496]]>(The Sage) knows he makes no fine display, and wears rough clothes, not finery. It is not in his expectancy of men that they should understand his ways, for he carries his jade within his heart.
– Tao Te Ching 70 (Rosenthal)

The short, hunched figure appeared in front of me loaded with purpose. The weather bent us both down, compelled our gaze towards cautious feet and the treacherous lack of grip underneath them. It was only a casual glance that saw the short red coat and hood approaching as I wondered who else might be out making their own time down the sidewalk. A child? A friend? Anyone I knew?

When we approached a few plodding paces apart a quick glance up saw her as an old woman. I could not make out many details about her presence rendered trivial as we both concentrated on our chilling task, the path from here to there. I smiled a quick “Hello!” and she said as much back as we passed, still a stranger though also a comrade in purpose. We were both anonymous in our shields against the cold that might catch up if we had stopped for any more than a word. The weather itself had rendered us equal, distant, and humble.

Irvine Park in the Snow

The gnawing cold of Winter strikes every year in the middle of a great continent, hardly a surprise. But the depth of it is still shocking as weeks pass by without crossing freezing. We are all bent low by the experience even as we reasonably expect it. The simple act of making our way takes on an air of heroism, a struggle that defines us huddled in our own cocoons to keep warm.

The woman that morning on West Seventh Street was utterly anonymous at a distance, the same as anyone else. I could not tell if she was black or white, old or young, a friend or a stranger. Even close up there was little of her story I could make out other than her moment was about the same as mine. There wasn’t any time to exchange details, either. A quick acknowledgement that we were in this together was about all either of us were capable of managing.

That reaction to the weather had to be as expected as the reality of February itself. There isn’t much else any of us can do, other than buttoning up in a car for those with the scratch to afford it. Once we’re on the sidewalk making time we’re all the same, equally anonymous and determined.

When it’s cold, we’re all in it together.

The culture of this part of the world often seems strange to those who aren’t used to it. The assumption of equality carries over into the warmer months, the times of the year too easy to define us. People use first names and familiar language carelessly, even when traveling abroad to places both more formal and fluid. Where many places use language to define barriers between people even they stand rather close, the upper Midwest uses language to convey sameness and equality – to the extent we get to use language at all.

Most of the year this attitude rankles me, I have to confess. Having come from a warmer climate with easy life but a tremendous amount of ethnic diversity, I was taught early on the value of respect. People are addressed by “Sir” and “Ma’am” if there is any question, and family names are used until we’re told otherwise. I’ve had to teach my kids what a culture based on respect looks like, how it operates, and how to be a part of it as if it comes from a foreign land. It does, in fact.

Liberté, egalité, fraternité. Yeah, that again. It still works.

That’s not to say that people around here lack respect, but that the first thought anyone has when meeting a stranger must be that they are about the same as they are. We’re all at least equal and have roughly the same hopes and dreams. No matter what the temperature, something about us is walking out the bighting cold along a sidewalk.

I call it my Theory of Climate and Culture, a fancy title that underlies the great humility of an annual assault by nature. “Given time, any people will develop a culture that is defined by their climate more than anything else – no matter how sophisticated and intelligent they think they are.”

One a day well below freezing the simple act of getting somewhere shows where this culture comes from. It’s a deep sense of humility forced on all of us by events. We define ourselves by the thick shields wrapped tight against the cold and our the rhythm of our own feet. We’re all the same out in this, equal in the struggle and the low moment of our day. It takes that kind of humility to understand where it comes from.

Filed under: People & Culture, Writing]]>http://erikhare.com/2015/02/25/humbling-cold/feed/18ipsnow-smwabbitoidIrvine Park in the SnowWhen it's cold, we're all in it together.Liberté, egalité, fraternité. Yeah, that again. It still works.Greece Stands Uphttp://erikhare.com/2015/02/23/greece-stands-up/
http://erikhare.com/2015/02/23/greece-stands-up/#commentsMon, 23 Feb 2015 03:27:37 +0000http://erikhare.com/?p=6492]]>Greece and Europe managed to find a way to kick the can down the road a bit, giving them four months to come up with a larger agreement. It’s exactly the kind of solution that we cynically expected here in many ways. But is there more to it than that?

The letter sent by Greek Finance Minister Varoufakis to the EU outlines exactly where Greece is coming from, and it tells us a lot more about the problem at hand. What he asked for was nothing more than the kind of consideration any other nation would want in this situation. That it was received so badly at first, then ultimately accepted in at least some form, speaks volumes about either the dysfunction of the EU or how bankrupt Greece is.

I believe it is the former, and the EU is nowhere near developing a stable process for dealing with issues like Greece or even calling themselves a real political or financial arrangement for the long haul.

The immediate problem is that Greece has a big lump-sum payment due in June for the financing agreement previously forced on them. The €6.7B that comes due is something they simply cannot handle at this time, and they are sounding the alarm bells before there is a problem. That’s where the four month window comes from. They are being responsible.

The longer term problem is the debt, which at face value is 175% of GDP. But the terms of this debt has been restructured so heavily that it cannot be considered at face value any longer. One investor who bought up a lot of it at fire sale prices, Paul Kazarian, believes that it has already been written down by about 90%. If you take that into consideration, Greece is by no means bankrupt – it simply has a short-term cash flow problem.

The solution to the Greek debt is, obviously, to cancel much of it and push the reset button so that the nation can move forward. Why doesn’t that happen? The long answer is that it’s impossible in the current arrangement. The short answer is that it already happened.

That’s the stuff.

More to the point, the Greek government is holding a lot of equity in banks and other businesses that they are supposed to privatize, or sell off to the public. That was supposed to cover the lump-sum payment that comes due this year. The new government believes that if they hold onto it until there is a recovery it will be worth much more and they will be in a much better position.

The US did as much when it bought GM and stock in several banks at the height of our own crisis. Iceland also nationalized its banks and held onto them until they were secure. Greece is asking for permission from the EU to do nothing more nor less than what any other sovereign nation does in a financial crisis of this kind. It has only gotten to the point that it has because no one has any faith in the Greek government – either the old one that created the mess or the new one that has to deal with it.

Panic doesn’t help anyone. But when the EU isn’t fudging, that’s what they are doing.

There is an obvious third way to handle the situation. No one really wants Greece to exit the Euro because it would create panic and confusion for everyone across the Eurozone. It’s a marriage of nations who are now bound to each other. If they all behaved that way, the nations who are pressuring Greece would give them support, not demands, and help them achieve the expertise necessary to manage the situation on their own.

Instead, Greece has a series of dictats telling them what to do. In this family, they are not adult partners but children.

What should Europe do with Greece? What is being done now is setting a precedent for economic problems and national mis-management for the future. It’s a horrible way to handle the situation and does absolutely nothing to convince Greece – or any nation – that the EU is indeed an equitable arrangement worth staying in.

If you believe that Greece is bankrupt, the solution is to bring in people from the outside to run the operation while the nation keeps on. Think of it like the FDIC, which swoops in to stop a bank failure here in the US. The problem is that sovereign nations don’t work that way and you can’t simply take them over. Greece needs help, yes, but it has to do this on its own terms.

Europe is muddling through this latest situation because it has to. It kicked the can down the road to 2015 and now it has to deal with those decisions. Greece, apparently, knows better and wants to develop its own plan.

They need to do that, and that plan needs to then be evaluated on its own terms. Four months may be enough time to do that. This agreement? It may be the best thing to happen to Greece and Europe yet – if the powerful nations manage to finally treat Greece like a real partner and not a problem.

Filed under: Money, Nooze]]>http://erikhare.com/2015/02/23/greece-stands-up/feed/27wabbitoidGreek Finance Minister Yanis Varoufakis, from his twitter account pic. No, I'm not kidding.That's the stuff.Panic doesn't help anyone. But when the EU isn't fudging, that's what they are doing.Contracted Changehttp://erikhare.com/2015/02/20/contracted-change/
http://erikhare.com/2015/02/20/contracted-change/#commentsFri, 20 Feb 2015 00:05:17 +0000http://erikhare.com/?p=6485]]>A generation or two ago, workers were able to count on companies large and small to take care of them. More than just their pay, the working people of America got something critical from their job – security, a promise that the material things in their life were something they could depend on. In return, there was loyalty – and after decades of work, a pension.

There is little doubt that the nature of work is changing. The exact nature of these changes and the magnitude is hard to pin down, but it’s clear that people don’t work the same way they used to. As we contemplate the next version of the economy forming around us as this Depression slowly comes to an end it is more and more clear that the nature of work – and the corresponding social arrangements that come from it – will continue to change.

This is why reform in policy, taxation, and many other fixed arrangements is essential.

The fuure has to have room for everyone, ‘cuz we’re all going there.

Today about 140M Americans are employed at least part time. The total number of unemployed and underemployed (those working fewer hours than they want) is about 13.1M by the comprehensive U6 unemployment rate, a staggering figure that is down about 5.5M in the last 18 months. There is reason to be concerned but still reason to hope.

Many of those who have jobs work as freelancers, contract workers, or some similar definition of people who work primarily from one gig to the next. The definition of such workers is important because it is completely not fixed by anyone – resulting in a lot of confusion as to who exactly works for themselves.

Disclaimer: I am a freelance writer, and I fall into this definition anyway you call it.
Sales Pitch: I am always available to hire!

How many people work for themselves? By the official figures, it’s only about 9.5M of today’s workers, or 6.8% of the workforce. The official Bureau of Labor Statistics (BLS) numbers show this number actually dropping over the last 65 years that data has been kept:

The official “Self Employed” number from the BLS over time.

This is a measure only of traditional “self employed” people such as farmers and shop owners. The BLS has not changed its definition, so anyone who works for someone else for more than 20 hours a week does not count. It does not matter if they are a contract employee on an 1099 form – employment is employment to the BLS.

Sign it and get to work!

Two different studies were done in 2014 on people who work for themselves, and the results vary dramatically. The most cited is the most dramatic, last September’s report from the Freelancer’s Union that showed up to 53M Americans got at least some of their income from freelance work, or 38% of the workforce. Of these, 21.1M (15% of the workforce) were full time “Independent Contractors” and 14.3M (10%) were “Moonlighters” who received a supplemental income from freelance work. The rest are independent business owners and people who received income from a mix of work.

Another study, performed by MBO Partners, is part of a series that has been done since 2011. They found that 17.9M (13%) were full-time “independent” employees and 12.1M (9%) were “side-giggers” who freelanced for additional income. The definitions, again, are important because they vary from one report to the next.

What we can say from MBO partners is that the number of “independent” employees rose from 15.M in 2011 to 17.9M in 2014. That 2M jobs is an impressive 30% of the 6.8M jobs created in total in the same period. Clearly, independent and/or contract work is growing in popularity.

This is important for many reasons dealing with how workers are protected, taxed, counted, and generally taken care of.

Employees are ready to work, but the terms keep changing.

There is little doubt that such workers have lower overhead per employee than a traditional employee. The attraction for companies is obvious and immediate simply for the cost per employee. It is also beneficial to have a flexible workforce that can take care of projects as they come along for many companies.

Separating health care from employment, one of the goals of the Affordable Care Act (ACA or Obamacare) is obviously essential as more workers are on their own. There may even be a net spike in such workers even as the economy grows as this kind of relationship becomes more attractive.

The benefits almost certainly end there, however. High tech companies in particular have no control over intellectual property, despite non-disclosure and non-compete contracts, in this environment. Workers also have far fewer protections against discrimination and other employment problems – and have to constantly find work for themselves.

Then there is the system that is setup to tax workers’ incomes. How much income doesn’t quite make it to the Form 1099 Misc Income? It’s impossible to say, or let’s leave it that I won’t say. It’s … a number. Add to this the worker’s responsibility for the employers share of social security, which is the 7.2% FICA tax on all income called the “self employment tax”, and we have a terribly antiquated system that is doing no one any good.

Try anything. It’s bad out there.

The 9.5M measured “self employed” that the BLS keeps track of is obvious low by about half, but what is the exact number? It’s very hard to tell because there is no fixed definition. But we know that the percentage is growing and covers about one quarter of all workers.

That number of people essentially outside the system as it was constructed is simply far too large and cries out for reform in every way workers are considered.

The relationship to work is obviously changing rapidly – beyond even the elimination of loyalty to one company for the duration of a worker’s career. Getting a handle on the needs of today’s employees must become the top priority for reform if we ever develop a Congress that is capable of doing any actual work to prepare us for the next economy.

Filed under: Money, People & Culture]]>http://erikhare.com/2015/02/20/contracted-change/feed/20wabbitoidThe fuure has to have room for everyone, 'cuz we're all going there.The official "Self Employed" number from the BLS over time.Sign it and get to work!Employees are ready to work, but the terms keep changing.Try anything. It's bad out there.Europe Muddles Throughhttp://erikhare.com/2015/02/18/europe-muddles-through/
http://erikhare.com/2015/02/18/europe-muddles-through/#commentsWed, 18 Feb 2015 00:05:54 +0000http://erikhare.com/?p=6480]]>Twenty years ago I was working in Germany, staying in the small town of Burghausen on the Austrian border. The cycle of holidays that mark the progress of the daily life of the town festooned red, white and blue as they turned towards “French Week” early in the Bavarian Spring. Buses of people from their sister city of Fumel, France came in and the menus in all the restaurants were replaced with copies in French. Burghausen celebrated the arrival of their guests as a family reunion of sorts.

I asked Herr Miterer, owner of the Hotel Post where I was staying, if this “European Union” was going to be successful. His piercing Teutonic glance betrayed the seriousness before he said a word. “It has to,” he said quietly, “We’ve seen the alternative.” Without moving his eyes he pointed to a picture of on the wall of this beautiful little inn that he and his family ran, taken in 1945. The top floor had been blown off and rubble littered what had become the biergarten.

The earnestness of Miterer comes back to me as the latest round of Greek crisis bubbled through the news this week. We’ve seen the alternative. Yet, somehow, it is never quite enough for Europe, this strange forced marriage that stays together for the kids, for the ideals, and for the sheer obligation of it all.

The European Central Bank, all shiny and imposing.

There is little doubt that a deal will be made on Greece, yet again, even as the new government of Tsipras plays hardball with a Friday deadline. Everyone knows they have to give a sense of relief to the voters that elected them, and everyone in Brussels knows they can’t appear to give away too much. They will fudge a new agreement and everyone will claim that they are satisfied.

The dysfunctional marriage will continue. This comes even as many have decided that a “Grexit”, or Greek exit from the Eurozone, would not be a total disaster. It would only be a small disaster, after all, and Europe should be used to that as well. Nevermind.

All of this comes amid a European Central Bank (ECB) realization that the austerity programs that forced the original settlement on Greece were a horrible idea. European economic growth is essentially zero and unemployment remains horrifically high. The ECB finally decided to print €1.1 trillion in “quantitative easing” last month. It was an admission of defeat without any real admission at all, something we have to expect.

Will we see the Drachma again? It’s unlikley.

The Greek crisis has pushed Europe much harder than anyone would ever care to admit over the last seven years, testing the marriage more than anything else.

The harsh terms given to Greece were the main reason that the EU was forced to pass on an historic opportunity in 2013, when it could have taken Ukraine’s glance westward with a now cheap looking $20B or less. As sure as all politics is local, though, the example set by such a loan would never fly in the midst of harsh terms for Greece and other nations on the edge in Europe. The EU passed on the loan, forcing Ukraine to continue to look eastward for help – and causing the people of Ukraine to take to the Maidan in protest.

If Europe had been strong, none of this would have ever happened. But it is happening and Europe now has to face not just their dependence on each other but their crippling dependence on Russia.

Chancellor Merkel. She’ll always find a way to win.

The crisis of the week will dissipate and Brussels will find a way to fudge the results so that no one will look bad. That’s not the problem at all. Perhaps the Euros being printed will restart the economy and provide some opportunity across Europe for the first time in nearly a decade. That’s not the issue either.

The problem remains that Europe is whatever it is simply because it has to be. It has no greater nor no lesser purpose than that. It’s a terrible situation to be in because the world cannot count on it to be strong and stable as a genuine force that matches the great economic and demographic strength it has on paper.

There will be a Europe, and there will be a Euro. It will be up to the kids of this strange dysfunctional marriage to tell us all if it was worth it.

Filed under: Money, Nooze]]>http://erikhare.com/2015/02/18/europe-muddles-through/feed/24wabbitoidThe European Central Bank, all shiny and imposing.Will we see the Drachma again? It's unlikley.Chancellor Merkel. She'll always find a way to win.Putin, Khameni, Netanyahu – and Marchhttp://erikhare.com/2015/02/16/putin-khameni-netanyahu-and-march/
http://erikhare.com/2015/02/16/putin-khameni-netanyahu-and-march/#commentsMon, 16 Feb 2015 01:22:58 +0000http://erikhare.com/?p=6475]]>A game of chess has been waged for decades over a part of the world that has seen more than its share of similar games over the last 2,000 years. Turkey, as the crossroads between continents, has always been at the heart of many games of geopolitical intrigue that have sometimes flared into war. Lately, however, the flares have been gasflares ignited along its periphery – valuable fuel often burned as a by-product with nowhere to go.

The game this time is all about putting a pipeline across Turkey to bring that natural gas into Europe. And for a variety of odd reasons, March is a critical month for how it will be played out. The key players are all sources of natural gas – Russia, Iran, and Israel. We will likely know in a month just who wins and who loses.

The Blue Flame. Europe needs it.

Natural gas is essential to Europe. They need it for basic industry, heating, and electricity generation. The continent uses oil as much as it can, given that it is much easier to transport in tankers and there are native sources that have been tapped in the North Sea. But natural gas, primarily methane, is the cleaner and more effective fuel of the modern world. Europe needs gas – and that means it needs pipelines that bring it in.

Nearly all of their gas comes from Russia, which is where we have to start. The war over Ukraine has put Europe in a bind because it logically should want to tighten the noose of economic sanctions over this belligerent nation. But it can’t without freezing. The recent peace treaty negotiated by Merkel and Hollande between Russia and Ukraine may hold, and it may bring peace – but no one is counting on this and the early results are not clear.

I really want this meme to catch on. Really.

It’s a big gamble for Merkel, the leader of Germany and as such the most dependent on Russian gas. If the treaty works, all is good. If it doesn’t, the noose of sanctions must be tightened. That necessarily means cutting off Russian gas if only indirectly as international banking is cut off by disconnecting the SWIFT interbank message system. Germany can’t contemplate such a thing until Spring is on its way, which is to say no earlier than the end of March.

By then, we’ll know if the peace is holding. If it isn’t, the flow of gas to Europe is very likely in peril.

There are other places that gas can come from, but they have been the subject of a mad game to put a pipeline across Turkey that has so far come to nothing. The most ambitious plan was called “Nabucco”, after the Verdi Opera. For over a decade this plan to bring gas from Azerbaijan was the biggest chess piece on the board, a queen that looked to sweep the rest away. Russia proposed their own pipeline through the middle of the Black Sea, the “Southern Stream” that would have made Nabucco economically iffy at best. Shortly after Nabucco was canceled, the Southern Stream was, too.

But with a new urgency, large sources of gas close to Europe are suddenly very viable, and Azeri gas just isn’t enough. Enter Iran and Ayatollah Khameni, who apparently sent a letter to President Obama ahead of the 31 March deadline for talks on opening up Iran as that nation gives up its nuclear program. Iran wants a way out, but more importantly Europe needs Iran to fill a new pipeline, as yet not proposed, with their gas. It is the wildcard in the game and the chance to open up the board with an entirely new player.

Turkey has been encouraging this as much as they can, even though they have no seat at the table for negotiations with Iran. One nation that does have a seat, China, has said that they have no interest in pushing out the deadline yet again. 31 March is going to be an important date in geopolitics, one way or another. Europe needs Iran, and Turkey is doing their best to connect the two.

Netanyahu simply looks like a hard-liner.

But there is one more player that wants to keep Iran off the board – Israel. Long bitter enemies, they are likely to clash more directly as the vast Leviathan field off the coast of Israel is tapped. The best thing to do with this gas is to send it by pipeline through Turkey to Europe, of course, but that means that Israel is competing with all the other potential sources of gas and has to prove it is economical.

Netanyahu will address Congress on 3 March, ostensibly about Iran’s nuclear program, but that may be literally a day or two late. It remains in Israel’s best interest to not have Iran join the family of nations again for many reasons, including their own energy exporting ambitions. This is also all about Netanyahu’s re-election, which comes two weeks later. If he loses that election it may make things easier for Turkey to work with Israel, but a chaotic government in Israel won’t help anyone.

And so three big names in leadership all come together in the next few weeks in a strange game of chess over the crossroads of civilization. It will appear to be about war, nuclear weapons, and US support for an ally as the key stakes of the game. But this will be about natural gas, specifically to Europe, and what has to happen to keep the lights on across the EU. We will know a lot more in a month, but this game could go just about any direction at this point.

Filed under: Money, Nooze, Politics]]>http://erikhare.com/2015/02/16/putin-khameni-netanyahu-and-march/feed/16wabbitoidnatgasI really want this meme to catch on. Really.Proposed pipelines across Turkey. All have been dropped.Netanyahu simply looks like a hard-liner.The Future is Theirshttp://erikhare.com/2015/02/13/the-future-is-theirs/
http://erikhare.com/2015/02/13/the-future-is-theirs/#commentsFri, 13 Feb 2015 00:04:02 +0000http://erikhare.com/?p=6473]]>If you are worried about the future of the US or the world, you need to attend a FIRST Robotics Challenge Competition. Your worries will dissolve into cheers for the moment and tears for the sheer beauty of kids doing amazing things – challenged and coached appropriately.

This year’s challenge isn’t quite the “hockey with robots” that we are used to. They have to stack bins and put a heavy container on top of them, a feat that challenges them to power great forces with intricate precision. It takes strategy, planning, and a lot of learning how to use power saws and drills. But the Great River School team 2491 No Mythic is hitting the challenge with great energy and determination. It’s also a lot of fun.

A study came out that says a little more about letting kids go off and do what might seem dangerous, even at an early age. It seems to fit with what I’ve seen at Robotics League.

Kids playing “Bullrush” in New Zealand. It’s like rugby without a ball.

A lot of people worry when kids are being kids. There is always the potential for serious injury when things get physical, as they often do. Perhaps it’s a rational fear of losing them or maybe it’s a symptom of a world that’s gotten horribly lawyered up, but most kids shuffle along through school under dark clouds of rules that limit what they can do. What they learn from the experience is that life is about rules, and those who can’t follow them for whatever reason are usually cast off as “trouble”.

But a school in New Zealand tried something different out on the playground with their little ones. Swanson Primary School, near Aucklland, took part in a study by Auckland Tech and Otago University where they got rid of the formal playground and all of the rules. Recess became their own time to structure and play as they saw fit. Some more violent games like “bullrush” (which we knew as British Bulldog) came back as well as playing with sticks and other implements of destruction.

The results were amazing. Disciplinary action declined substantially, and bullying incidents dropped to zero. Better yet, academic performance increased. Empathy became the lesson every day. The kids were happy and anything but sedentary sacks of cheeze-doodles. And no one was ever seriously hurt.

It shoots, it scores!

This may seem very different from our experience with high school kids at Robotics League, but the experiences overlap. Let kids go out and figure out what they can do and they wind up doing amazing things. When they are young and simply need to blow off steam it may look dangerous, but it’s better than trying to bottle up the energy with a lot of rules. When they are older, they have to be encouraged and trusted regardless of the perceived “danger”.

My role as a “mentor” is mainly to coach them along, but I also get my hands dirty. I also teach them really bad things like how to strip wires with their teeth. It takes way too much of my time, but the energy is infectious. I get more from them than they do from me.

The kids came into this with different levels of experience. All of them have a hunger to learn how things are made, something that very much needs to be at least an option in their regular schooling. Yet the team itself is much more than skills, it is all about making something great happen. How else is the next generation going to learn how to do, how to lead, and how to make the world in their own image?

Every parent worries about their kids getting into trouble, and there is certainly enough around when they are looking for it. In a rule-bound world where the kids are kept under control, however, all of them wind up on the wrong side of authority at some point – or at least learn to be in fear of the rules. Trouble only comes naturally to anyone who is constantly on a tightrope fearing a wrong step.

Kids can do anything, if you let them. The only risk is how much you’re willing to be amazed.

When kids are set free they tend to take care of themselves far better than any big set of rules ever could. With a little bit of coaching and encouragement the confidence they learn can be channeled into something great, like a team that can build a robot with dozens of acts of leadership shaping, forming, and building.

It is the leadership that matters in the end. This year’s team has a fairly distributed style of leadership that works well for this generation – and has show how necessary an emphasis on strategy is to this model. Through attention to the master plan, leadership comes naturally from one task to the next as whoever has the skills to get it done steps up and takes their turn to make things happen. This team may be building a robot today, but tomorrow they’ll be doing even more amazing things.

What happens when you turn kids loose to do what they do best? Anything. A good coach helps, but they are the ones who can design, build, and pilot their own machine – as they will do for the whole world one day soon. Let them learn their limits and abilities when the price of mistakes is just a few bruises. The only thing we adults have to fear is that they may make a world too fantastic for us to understand.

Filed under: People & Culture]]>http://erikhare.com/2015/02/13/the-future-is-theirs/feed/16wabbitoidKids playing "Bullrush" in New Zealand. It's like rugby without a ball.It shoots, it scores!Kids can do anything, if you let them. The only risk is how much you're willing to be amazed.Audit the Fed?http://erikhare.com/2015/02/11/audit-the-fed/
http://erikhare.com/2015/02/11/audit-the-fed/#commentsWed, 11 Feb 2015 00:05:26 +0000http://erikhare.com/?p=6463]]>This is not an ordinary election year in many ways. For one, it’s not really an election year – the actual voting doesn’t happen until 2016. It’s also going to be the first Presidential election without Obama since 2004 as the White House becomes open.

But more importantly, everyone seems to understand that the economy and the politics of this nation are both changing. Stuff is seriously up for grabs. A desperate cry for attention might make all the difference.

Enter into this a bid for more Congressional oversight of the Federal Reserve, an idea backed by no less than 30 Senators, 3 of which are clearly running for President. It seems like a good idea all around – what can be wrong with more oversight? That depends on what’s being overlooked now, of course, and what can be done with existing law.

To understand the need to regulate the Fed we have to start with what it does now and who it has to report to. Janet Yellen, the current Chair, has introduced a period of remarkable openness where her policy terms are announced months in advanced based on key economic indicators. As the most powerful person in the world Fed Chair Yellen is doing a remarkable job of being transparent in this key area. But what else does the Fed do?

To be the “lender of last resort” in the case of economic panic of financial meltdown,

To act as the clearing house for all checks and bank wire transfers,

To regulate and supervise US banks in accordance with US law, and

To maintain the value of the US Dollar through monetary policy.

The 12 Federal Reserve Districts. All US Dollars are marked by which District issued them with letters A-L.

All of this is subject to Congressional oversight – which is absolutely never put into practice beyond the Fed Chair’s biannual testimony.

Monetary policy is the big deal, the one everyone focuses on. It is decided at the “Open Market Committee Meeting” where the 12 Governors from the regional Federal Reserve Districts (as pictured) decide, with the Chair, what their “Federal Reserve Funds Rate” will be. This is what they charge banks on overnight loans and, as such, influences the loans those banks in turn charge to commercial lenders.

The rest of the functions are never in question, but they should be. The Fed as a regulatory arm has set up a cozy relationship that has clearly given banks far too much leeway. The decision to give this power to the Fed was a decision to take bank regulation away from the messy world of politics. It appears to mean that, in practice, there is little pressure to enforce regulations and banks can get away with an awful lot.

The proposal at hand is to “Audit the Fed”, which is to say conduct a full scale review of their books. The legislation, as discussed publicly, is all about checking over the books to be sure that it’s all in place. It sounds like a great idea, and an independent audit should be welcomed by everyone.

There’s only one problem – Congress could do that with the power it has already.

It’s unclear exactly what new powers would be given to Congress under the legislation proposed. Under Dodd-Frank, the detailed minutes of all Federal Reserve Open Market Committee meetings are released within two years. Everything the Fed does is relayed in a dizzying number of charts, graphs, and reports – much of which is available at the St Louis Federal Reserve’s website.

If you want to know what the Fed holds, that’s also easily available. They have $2.5T in US Treasury Bills on the books, for example, and you can see how that number has grown over time:

The Fed’s holdings of US Treasuries. Data, like nearly all the data publicly available, from the St Louis Fed.

What exactly that means is always an open question, of course. When the US Government pays interest to the Fed, where does it go? Can’t the Fed simply forgive these US Bonds and let us off the hook? They are the ones who print the money, after all, and owing them some of it back is a head-scratching problem – especially when the amount owed is so incredibly large.

We have the numbers already, and nothing is going to give us more information. What the numbers mean is the hard part.

Who is behind the curtain? There is no mystery here. Really.

But none of this is under consideration at this time. The call is for more openness from the Fed, which is arguably more open than most of the Federal Government. It certainly tells us an awful lot more about where the money goes than the Defense Department, for example, which has proven to be unauditable.

It’s an easy political call to write a bill that lifts the veil of secrecy and promises to reveal who the man behind the curtain is. The problem with this is that we know who is behind the curtain, and she’s a woman named Janet Yellen. Nothing is secret, and there are no mysteries.

There is a problem that very few people understand what is going on, but you can’t legislate your way through the mountains of detail that already exists.

If someone wants to propose that the Fed be stripped of its regulatory power in favor of a tough organization with a strong criminal investigation arm, by all means let’s have at it. But to simply audit the Fed? We can do that now. Let’s do it and put aside all the showmanship. There are other things we can worry about ahead of 2016.

Filed under: Money, Politics]]>http://erikhare.com/2015/02/11/audit-the-fed/feed/19wabbitoid"This is how it is. Got it?"The 12 Federal Reserve Districts. All US Dollars are marked by which District issued them with letters A-L.Sen Rand Paul (R-KY) is choosing to grandstand over doing actual work. The Fed's holdings of US Treasuries. Data, like nearly all the data publicly available, from the St Louis Fed.Who is behind the curtain? There is no mystery here. Really.Money is Just a Toolhttp://erikhare.com/2015/02/09/money-is-just-a-tool/
http://erikhare.com/2015/02/09/money-is-just-a-tool/#commentsMon, 09 Feb 2015 00:28:29 +0000http://erikhare.com/?p=6461]]>What is money? Your answer may depend a lot on how much of it you have. Ultimately, the main purpose of money is convenience. A system of barter works pretty well when two people have things each other need – someone with chickens meets up with someone else who recently slaughtered their pig and both have bacon and eggs. But if you can also exchange those eggs for money you can save it up to buy something different or bigger.

As we’ve concluded before, Adam Smith was right – money is a matter of belief. Whether it’s gold, Euros, or Canadian Tire Money it’s worth whatever you believe it is worth. Our own US Dollar is backed by the “Full faith and credit of the US Government”, which is scary if you think about it.

But money is more than convenience and faith – it’s what it takes to make things happen. And that’s worth thinking about some more.

We live in a time when there is both too little money and too much money. One of the features of a Depression, as we live in now, is that jobs become scarce enough that the old “trading time for money” system starts to break down. The velocity, or turnover, of money in the economy means that there isn’t enough available to many people to satisfy their basic needs. The government and Fed have responded to this Keynsian stimulus (profligacy?) and the glories of “Quantitative Easing” (printing it).

While policy has certainly helped get us through the hard times, inequality has increased dramatically – and this seems to be one of the best indicators of an economy on the decline. Which naturally brings us to the meaning of money, something that depends a lot on how much you have.

Not everyone can do this.

What does money mean to you? Odds are it’s one of these three choices:

1) What you need to get by on a daily basis (a view typical of the poor)
2) Something to get you what you want or need (a more middle class view)
3) A way of keeping score (for the rich)

The last one may surprise you, but it’s very true. The excellent History Channel series “The Men Who Built America” is a chronicle of the industrial titans of the 19th and 20th Century, such as JP Morgan, JD Rockefeller, Andrew Carnegie, and Henry Ford among others. The size of their bankroll was very much a matter of bragging rights and what kept them to avariciously grab for more even when they were wealthy beyond their wildest dreams.

This view is not limited to the rich, of course, but is common among people whose needs are pretty much satisfied. One version is “Keeping up with the Joneses”, circa 1960. Those were good times.

The first tool I ever bought.

Each of the views above typically go hand in hand with how long into the future you are comfortable looking – whether you are surviving or thriving. But it’s when we get to “keeping score” that it all seems to break down. The timelines and horizons of the very rich only sometimes get to the point where they honestly contemplate the longest view – and what money should mean to everyone in a truly equitable society.

I tell you this – in all cases, in all classes, money is a tool. If it isn’t getting you happiness, it’s not always a matter of how much money – it may be how you are using it.

Forgetting something this happens when you just don’t have enough of it, but it also fuels the debt cycles that create Depressions in the first place. Borrowing to invest in yourself and your productivity is very different from borrowing to stay alive or live in luxury. This distinction is important, and whether we are talking about personal finance or the wealth of nations it seems to be forgotten.

Of course, some people simply do not have enough to get by – there is a basic “overhead” cost of life in America which we can call the “Poverty Line”. It’s about $11.7k for a single person, $14.7k for a couple, and $22.8 for a mythical family of four. Once you’re below that, or even close, it’s hard to see money as anything other than a desperate struggle.

But the goal for an equitable society has to be to get everyone – regardless of situation – to understand that of all the tools they have in heart and arm and brain, money is just one more in this integrated world that is far more complex than the bartering days. For some, that means we need to help them. For the rest of us, we have to re-evaluate what we are doing – as people and as a people.

Filed under: Money]]>http://erikhare.com/2015/02/09/money-is-just-a-tool/feed/20wabbitoidmoneyNot everyone can do this.The first tool I ever bought.The Expectations Gamehttp://erikhare.com/2015/02/06/the-expectations-game/
http://erikhare.com/2015/02/06/the-expectations-game/#commentsFri, 06 Feb 2015 00:05:08 +0000http://erikhare.com/?p=6456]]>Investment is a tricky thing. You put up a lot of money in the expectation that you’ll have a small return year over year. Currently, the expected rate of return is historically small in the developed world, on the order of a few percent. It has to be weighed against the risk that the initial investment will never be paid back, winding up in default.

The slowdown in the global economy is not actually a decline in output all over the world, but a pause in the rate of growth. It wasn’t expected, either, which is the real problem. The developed world is largely stagnant, save some hope in the US for better times ahead. The developing world need to catch up, but appears to be taking a breather after a tremendous run.

As we consider the next few years and the potential for a genuine boom ahead, it is becoming clearer that we aren’t ready for anything more than muddling through until there is a reckoning and a realization of how the next economy will work – for everyone. That will take some patience and public investment all over the world.

Demand for oil didn’t rise as fast as expected, so supply got ahead of it.

The price of oil is the clearest sign that things aren’t right in the world. Global demand for oil was expected to increase by a bit over 2% in 2014, from 90M bbl per day to 92M bbl per day. It wound up increasing by only 0.9M bbl per day, with the rest stockpiled in large tank farms. Supply has been running ahead of demand for nearly a year now, and the result has been a general collapse in the price.

The reasons for this have everything to do with the restructuring of the global economy. The US economy is firing up with little change in overall demand for oil, stuck at around 19M bbl per day since 2010. Europe isn’t growing much, and demand is also stagnant.

Growth is expected to come from the developing world, but the second largest consumer of oil, China, is facing a decline in its incredible rate of growth. They are still expected to consume 10.7M bbl per day in 2015, but that’s up only 0.3 bbl per day or 3%.

Did you get our jobs?

The reason for this is a general slowdown in China that has their incredible rate of growth slowing down below 8% per year for the first time in two decades. Their expectation was that they could continue growing like that forever, and it’s priced into everything. The slowdown has made investors nervous for about a year and a half now, with many expecting a general failure of their banks as a result. When loans are made under the assumption that growth will be robust, everything has to run like clockwork to make it happen.

Failure to meet expectations is a failure. Growth has to be more than good, it has to be perfect.

Increasing the supply of investment capital makes sense when there is a shortage of it. There sure isn’t now.

It is a mirror of what has happened throughout the developed world in that everything is being run by central banks. They are only able to control the supply of money, which is to say how much cash is available for investment. This is what “supply side” economics is genuinely about – the money supply. The theory is that more cash available to invest creates more investment, which creates jobs, which fires everything up.

It doesn’t work that way when there is a general slowdown in demand.

The alternative, demand side management, is trickier. It’s often called Keynsianism after its first big promoter, John Maynard Keynes. He was the one who called for direct job creation programs in the Great Depression of 1929 in order to stimulate demand for goods, which would in turn create more production and create opportunities for investment. Central banks can’t do this – it’s up to governments and private industry (not necessarily in that order, of course).

What this comes down to, however, are the expectations of people in their own private lives. Will more gadgets and more consumption make us all happier? If you ask the developing world, the answer is generally a solid “Yes!”. They don’t like being left behind. If you ask the developed world, however, there is every reason to believe that stagnant population growth and lower expectations resulting from years of Depression have people much happier with less – at least in terms of more every year.

At some point, money doesn’t buy happiness – in only buys more waste.

This thing called an “economy” remains nothing more than a collection of values, after all.

How can we increase demand around the world? The short answer is that we probably can’t, at least in the short term. The restructuring to the next economy is far from complete, and the values of the people who make up this great big global economy have not been determined. The developing world has its own infrastructure and civil problems to take care of before they can say they have a stable consumer class.

Expectations have been running high since the world pulled out of the worst of this Depression starting around 2012. They shouldn’t. We are doing fine on our own, and some activity such as a slowdown in the growth of oil consumption will be good for everyone in years ahead. It just makes it harder to set big expectations for a quick turnaround. Where high growth has been priced into investments, such as in the stock market, there is only a setup for disappointment.

Filed under: Money, Nooze]]>http://erikhare.com/2015/02/06/the-expectations-game/feed/15wabbitoidDemand for oil didn't rise as fast as expected, so supply got ahead of it.Did you get our jobs?Increasing the supply of investment capital makes sense when there is a shortage of it. There sure isn't now.At some point, money doesn't buy happiness - in only buys more waste.A Slippery Commodityhttp://erikhare.com/2015/02/04/a-slippery-commodity/
http://erikhare.com/2015/02/04/a-slippery-commodity/#commentsWed, 04 Feb 2015 00:05:32 +0000http://erikhare.com/?p=6449]]>Oil is the most traded and shipped commodity in the world, amounting to a total of 90M bbl per day total production – 33B bbl per year or nearly $1.5T even at today’s low price. There is nothing more critical to a developed or developing economy than to keep things moving, which is to say this vast ocean of oil is critical to the economy as we know it today.

You’d think with such a steady supply and critical demand that the price would naturally stabilize according to the natural laws of supply and demand. Apparently, oil greased its way through that semester of economics.

Where will the price of oil go from the decades-long low of $45 per bbl that it is today? The short answer is that no one knows. The long answer is that anyone who hasn’t been cashed out of the game is betting that it has to go higher, but no one know when or how high.

It’s always been about the black stuff.

Barataria first made the call when oil was starting to slip off the $90-$110 range for West Texas Intermediate (WTI). The thought then was that it couldn’t go much lower than $80 per bbl because oil wells throughout Texas, Oklahoma, and a few other states that had been come online at that price were economical at the magic $80 mark. Classical economics predicts that they go off, the supply goes down, and the price goes back up. Simple, yes?

Wait, this is oil we’re talking about. Nevermind.

Before we go through the scenarios that are starting to play out it’s worth noting how we can convert any price for WTI to a net gasoline pump price here in Minnesota. Divide the WTI by 42 gallons/bbl and add $1 per gallon for refining, transportation, and taxes. Prices in California are about 25 cents higher, in Texas about 20 cents lower.

Where are we today? WTI has stabilized at $45 per bbl ($2.05 pump gasoline) and have been there for nearly a month. It seems to be the real floor that we were all looking for. The floor was found not so much by a decline in production, however, as it represents a level at which refiners are willing to start stockpiling and absorbing the excess that is still flowing in January.

A common sight throughout the nation lately.

For this reason, some have speculated that this is only a bump and the price could dip as low as $30 per bbl ($1.72 pump), which is the estimated cost of production in Saudi Arabia. No one believes that the Saudis would sit at zero profit forever, and everyone agrees that nearly all other producers would start switching the pumps off at that price. So if it does dip any lower than it is today it won’t stay.

The next plateau, should prices rise this summer, is $80 per bbl ($2.90 pump). This is the threshold for the US throttling back, a process that does not seem to have started yet. Very few people think that it won’t be back to this level by summer, but we’ve all been wrong before.

The long-term threshold is still $100 per bbl ($3.40 pump). This is the price where oil was stable for a long time, and most governments used as a planning number. It goes up and down 10% from that, which is still ridiculous, but it beats today’s volatility. Over the long term, say two years, most analysts still think this is the equilibrium.

Then again, it could snap back if all the wells in all the world turn off at once. OPEC’s Secretary-General Abdulla al-Badri says this is a possibility in what is clearly an effort to talk up the price. His call is a rebound as high as $200 per bbl ($5.75 pump), a number that no one seriously believes. But it’s out there.

To figure out which of these plateaus for the price are most likely, we have to look at what is driving the price today. It’s not about excess production as much as it is about reduced demand due to a weak global economy and the strength of the US Dollar, which all oil is priced in. Those trends will not reverse quickly, and if anything the Dollar is expected to continue strengthening. The latter is why the long-term price is more likely to stabilize at $80 per bbl rather than the $100 per bbl we had for years.

Economics has too much hand-waving to be an exact science. But it tries.

What has to happen is that production has to fall to match the reduced demand. This doesn’t happen quickly because of a critical market failure – sunk costs. Investors put up money to turn an oil well on, and the well has to make that money up before the operators are willing to turn it off. With low prices, that requires even more pumping, not less.

The key is when oil well operators either can’t finance their wells anymore and give up, leaving investors holding the bag. That hasn’t happened yet, but must eventually. This is the main reason why oil prices are incapable of responding quickly to changes in the market.

Where is the price of oil heading? Most big bets are being placed on $80 per bbl or about $2.90 at the pump in the middle of the nation. The best bet is that we’ll hit that by the end of summer. But it could be much better or worse than that as the market remains in turmoil.

Not a good thing for the most important traded commodity in the world.

Filed under: Money, Nooze]]>http://erikhare.com/2015/02/04/a-slippery-commodity/feed/18wabbitoidIt's always been about the black stuff.A common sight throughout the nation lately.OPEC Secretary-General Abdullah al-Badri wants to talk the price of oil up.Economics has too much hand-waving to be an exact science. But it tries.Lift Every Voice & Singhttp://erikhare.com/2015/02/02/lift-every-voice-sing/
http://erikhare.com/2015/02/02/lift-every-voice-sing/#commentsMon, 02 Feb 2015 00:33:53 +0000http://erikhare.com/?p=6444]]>A celebration to start Black History Month

Our third grade class filed under the concrete breezeways that loosely connected the classrooms of Coral Reef Elementary, past the Seagrape tree at the end of the open courtyard, and into the big cafeteria. It was the only space large enough to hold all the energy of so many kids, cooled only by tall jalousie windows that caught the breezes off Biscayne Bay. The air inside was heavy and anxious, and just like nearly everything in Florida it could be oppressive if you let it get to you. But we kids just took it in and made it exciting. This was our music class, the time when we could bubble our energy in a new song taught to us on the tired piano by Mr. Michaels.

Lift every voice and sing, till earth and Heaven ring,Ring with the harmonies of liberty;

Kids don’t know race, but they know when the grown-ups are tense.

There was an earnestness to the way he played it and a seriousness to his voice as he coaxed us along. We could all tell that this was an important song, but what mattered to us was that like so many of his selections it was fun to sing and a joyful break from the languid classrooms book learning. Mr. Michaels made careful sure we had it down, the first of many times we would sing this song together with all the energy of little kids.

Let our rejoicing rise, high as the listening skies,Let it resound loud as the rolling sea.

It would be years before I came to know this song as “The Black National Anthem”. It was taught to us as something beyond that, however. Mr. Michaels led us to sing this together as an anthem of desegregation, the great force that sent us kids first to Coral Reef Elementary, then to Leewood, and now back to Coral Reef – and we’d finish up at Frank C. Martin. That was the reality of schooling under the watchful eyes of the court order. It came down to us like an experiment, at least in the sense that the adults never seemed to know just what they were doing. We kids were the ones that had to make it all work somehow. Whatever the sins of the past were, they were not ours.

Sing a song full of the faith that the dark past has taught us,Sing a song full of the hope that the present has brought us;

George Washington Carver is one of the greatest scientists who ever lived, period.

In the schools February is Black History Month. A new generation learns about great figures like George Washington Carver, a man who deserves far more than casual treatment as “the peanut guy” once a year. They learn about the conscience of a nation propelled into war by the fiery stare made rhetoric and then action by Frederick Douglass. The kids hear the concert of Marian Anderson that echoed against the stone of the Lincoln Memorial because she was kept from the gilded hall reserved for white singers. That history of slavery and segregation was a distinct Black History, but for us it came together in the steamy cafeteria with hundreds of young voices doing little more than enjoying what was in front of them.

Facing the rising sun of our new day begun,Let us march on till victory is won.

There is always more work to be done as surely as there are always more stories to hear. There are also songs to sing, especially “Lift Every Voice and Sing” by James W. Johnson. When no one knows quite what else to do this simple song can raise hope as it raises voices together. I would like to offer this to you the way Mr. Michaels gave it to all the kids at Coral Reef Elementary in celebration of this month and all that it represents.

Filed under: People & Culture]]>http://erikhare.com/2015/02/02/lift-every-voice-sing/feed/13wabbitoidKids don't know race, but they know when the grown-ups are tense.George Washington Carver is one of the greatest scientists who ever lived, period.Hot Center to a Cold Stormhttp://erikhare.com/2015/01/30/hot-center-to-a-cold-storm/
http://erikhare.com/2015/01/30/hot-center-to-a-cold-storm/#commentsFri, 30 Jan 2015 00:05:29 +0000http://erikhare.com/?p=6438]]>If you can think of two things no one would like to do in Russia at the end of January, standing around in a line and fighting a war come to mind pretty easily. But that’s exactly what seems to be in the cards for far too many Russians as the Ukraine and economic crises continue howling like a bitter wind that never ceases.

The acceleration of both appears to be assured right now, especially if the West continues to link aggression in Ukraine with more economic sanctions – which at this point will have to be severe to be considered “new”. The new Cold War is definitely on, but there are no assurances that it will continue to be cold much after the freeze of midwinter.

Standing in line at a Russian bank. There are rumors this is happening a lot, but no solid media reports.

The economic crisis in Russia has far more to do with internal structural problems (ie, corruption) and the low price of oil than the sanctions imposed by the West. The banking system has always been a cozy agreement between oligarchs as much as a legitimate front to the Mafia run kleptocracy that is the central government. It was papered over with plenty of Euros flowing in as long as the oil flowed outward at a decent price.

The Russian Central Bank was able to stabilize the Ruble briefly at 54 to the US Dollar with a dramatic rise in interest rates between banks last December. It stands now at 17.6%, with small business and consumer credit available to only a chosen few at over 30%. The Ruble has since crashed back to 68 to the US Dollar as a plan to print 1.6 trillion Rubles (currently: $23B) in order to recapitalize the banks and avoid a general panic. So far there are only a few reports of lines forming at banks, but the tightly controlled media hasn’t aired anything about a general panic.

A year ago, there were only 34 Rubles to the US Dollar.

Even Gorby is blaming this on the West, something we should take notice of.

The worst of this comes as Russia has dramatically stepped up the fighting in Eastern Ukraine – and been matched by the Ukrainian forces equally eager to ignore the cease-fire agreement technically in place. The fighting has intensified greatly in the last few weeks, accompanied by a Russian war of words blaming the whole crisis on the West. Even Mikhail Gorbachev, an internationalist and no friend of Putin, is blaming the US and Europe for accelerating the conflict and threatening to turn it into a hot war between Russia and the West. That could a sign that patience is thin and patriotism is thickening.

Such a threat sounds much worse in January, so time for cooler heads is the most likely result – especially from the bureaucratic minded EU.

Russian rebels in Eastern Ukraine, fighting through the Winter.

No matter what, life for ordinary Russians has become harder than a typical midwinter, and there is little promise of a decent Spring, either. How much this will test their legendary fatalism and reserve remains to be seen, but for now we can see where Putin wants to take this – deeper into Ukraine. The challenge to the West is obvious, but the appropriate response is not. Poland wants more sanctions to save their brothers in Ukraine, and is ready to send more arms in. The rest of Europe is rightfully scared of a hot war, a potential World War III.

Looking at trends to predict the future gives us no reason for hope. Deeper economic troubles so far have been met only with greater and more open aggression in Ukraine. Additional sanctions are likely to continue that trend as Putin continues to back himself deeper into a tight corner. But the West feels a need to respond and not capitulate Ukraine to Russia.

We will likely know before Spring where this is going, but probably not well before. The financial crisis has to play out a bit more and the reserve of the tough people of Russia has to be tested before there is any internal pressure on Putin to give on Ukraine.

Until then, the steppes of eastern Ukraine remain the frozen center of a hot war that still swirls cold around them through Europe. How long this will remain the isolated center of a storm that could engulf the world is anyone’s guess. All that we know today is that the temperature is the only thing reliably cold in this part of the world today.

Filed under: Money, Nooze, People & Culture]]>http://erikhare.com/2015/01/30/hot-center-to-a-cold-storm/feed/19wabbitoidStanding in line at a Russian bank. There are rumors this is happening a lot, but no solid media reports.Even Gorby is blaming this on the West, something we should take notice of.Russian rebels in Eastern Ukraine, fighting through the Winter.A Tale of Two Classeshttp://erikhare.com/2015/01/28/a-tale-of-two-classes/
http://erikhare.com/2015/01/28/a-tale-of-two-classes/#commentsWed, 28 Jan 2015 00:02:44 +0000http://erikhare.com/?p=6428]]>The stock market is tanking. It has to bode poorly for the economy, yes?

If we’ve learned one thing over the past six years, it’s that what is good for investors is not necessarily good for workers – and vice versa. As Herman Miller, an accountant friend of the family told me as a child, “Never forget that the stock market is only a market for stocks.”

So what is the future for stocks? In the short term, not good. For workers? That may be a better story. And if the fortunes of these two classes cross each other it’ll be the story of this year as the ups and downs and devilish details read something like a novel.

At that time, the prediction was for a lot of volatility and a small swoon by the end of the year. What we got shortly after that posting was an S&P500 dive back down to where it started the year, followed by a ragged increase. Not exactly a good prediction. Here’s what it looked like from October until today:

The S&P 500 since October. It’s been one Hell of a ride, and it’s probably not over.

Given this track record, why would anyone listen to Barataria now? The short answer is that while we were off on the timing, the direction is utterly inevitable. Corporate profits are down as the strong dollar limits income from overseas and puts competitive pressure on US manufacturing. The European situation has only become worse with Greece electing an austerity hating government that is willing to take on the Germans like no one did before.

It seems like fun when you’re at the top.

The volatility in stocks is a result of two forces on them, an uptick in the economy facing a corresponding uptick in interest rates. Since the market doesn’t look forward more than a few trading days anymore, we can expect that future events, no matter how certain, are simply not priced in. The fall we see now is something that should have come last year – but didn’t.

We will find out about interest rates on Wednesday as the Federal Reserve Open Market Committee releases their intentions, and we will know more about 4Q14 GDP on Friday. It should all point to a mid-year rate increase, even with mild inflation pressure. That’s about all anyone cares about.

No one is paying attention to jobs anymore for one simple reason – it’s been going well. We’ll find out next week how well, but it’s been a good ride so far. The economy remains on a pace to absorb the unemployed over the next two years, with labor markets tightening already. In an era where bad news is good news, driven by Fed watching, we can say that the only unequivocal good news is no news.

Which is to say, stop watching the news – it’ll drive you crazy.

We can see how upward pressure on wages may already be happening in this chart that shows average wages, adjusted to constant 2008 Dollars:

Inflation adjusted hourly wages, on average, since 2006. From the Federal Reserve of St Louis.

Note that wages spiked upwards right in the middle of the huge firing binge of 2008. That’s an artifact of the marginal workers being let go and the most productive employees staying on – often working long hours. It makes the wages of 2006 look pitiful by comparison.

Wages started to fall as the economy trudged along, hitting a low point in 2012 – two years after the bottom for employment. When any given worker can be replaced by someone off the street, wages stagnate or even fall. We saw that.

Construction is picking up along with everything else.

But now they are going back up and are, in real terms, higher than ever before. It’s an important milestone. It’s also a trend that we can expect to continue as employment moves forward and there are fewer workers competing for every job opening.

How does this all shake out for investors versus workers? Certainly, the big gains for investors starting in 2010 gave them an early lead in the race between the classes, widening the problems with income inequality. But this should be the year that this starts to change as the economy normalizes and gets back on track.

It may be a bad year for investors, but it’s most likely to be a neutral year of few gains. Those should go to the workers if trends continue. And those trends didn’t get started a moment too soon for working families in America.

Filed under: Money, Nooze]]>http://erikhare.com/2015/01/28/a-tale-of-two-classes/feed/26wabbitoidThe good numbers are always buried.The S&P 500 since October. It's been one Hell of a ride, and it's probably not over.It seems like fun when you're at the top.Inflation adjusted hourly wages, on average, since 2006. From the Federal Reserve of St Louis.Construction is picking up along with everything else.Bibi Comes to Washingtonhttp://erikhare.com/2015/01/26/bibi-comes-to-washington/
http://erikhare.com/2015/01/26/bibi-comes-to-washington/#commentsMon, 26 Jan 2015 00:35:29 +0000http://erikhare.com/?p=6422]]>Why is foreign policy so difficult? If you were to ask Tip O’Neill, he’d tell you that “All politics is local,” a phrase he credited to his Dad. Take that mindset and set it loose in an integrated world and pretty soon you have nations talking right past each other with no hope of ever finding common ground.

That’s what brings Israeli Prime Minister Binyamin Netanyahu to Washington on 3 March to speak to a joint session of Congress – but not President Obama. It’s also what makes it very likely that this will be an epic disaster for at least some of the parties arranging this trip.

Netanyahu simply looks like a hard-liner.

The speech itself is a major breach of protocol, apparently unprecedented in Washington. Speaker Boehner (R-OH) invited Netanyahu without consulting President Obama and continued making arrangements over Obama’s objections. The reason for the Presidential snub? The trip comes just two weeks before a scheduled Israeli election on 17 March, and the White House never gets involved in another nation’s domestic politics (at least not this openly before an election).

The unusual and hastily arranged trip satisfies the needs of Congress and Netanyahu, not the US and Israel. Congress wants to use its new power to humiliate Obama and Netanyahu wants to be re-elected. Both have a common interest in preventing a US rapprochement with Iran which may be coming through the years-long talks on Uranium enrichment. If you ignore any sense of tradition and protocol it seems like a natural fit – but that is exactly why it’s likely to be a disaster for Congress, Netanyahu, or both.

The last foreign leader who could tell us what to do. He’s been dead for 50 years.

For one, Americans hate having a foreign leader tell us what to do. It really doesn’t matter who it is, be they an ally or enemy. If Netanyahu goes beyond a detailed explanation of what he is afraid of in Iran and steps into what even smells like a dictation of policy, it’s almost certainly going to look terrible.

Another problem is Netanyahu himself. He’s not exactly charming and will almost certainly say something bold, forthright, and totally inappropriate for a US audience. Which takes us to the next problem.

Netanyahu will almost certainly be speaking to an Israeli audience which has its own politics and its own language. By doing so, it will appear that anything that brings down the house in raucous applause will be a sign that Americans are wading into an intractable conflict that we already are in up to our necks. That will almost certainly scare the Hell out of everyone in the US.

The US is already war-weary. The last place we want to go into deeper is Israel.

Then there is the question of the media, which will cover this in the US from their reliably myopic US-only perspective. Having established an unprecedented breach of protocol they are unlikely to give anyone, especially Netanyahu or Boehner, any benefit of the doubt on controversial points. They’ll most likely want to egg the situation on as the story of “Boehner takes on Obama” is an easy piece of manufactured news that will be alarming, important sounding, and very easy to write.

Lastly, we have to consider the Israeli audience which knows how important US backing is for them. The Obama administration will probably put as much distance between themselves and Netanyahu, giving the Israeli left a legitimate story that Netanyahu’s recklessness is risking the isolation of the hunkered down fortress nation. It is very likely that something will show tremendous strain in this trip that any credible reporter or opponent can make something out of.

Hassan Rouhani, President of Iran. He is not a reliable bogeyman, but can we go as far as to make peace with him?

Given the incredibly high stakes for this trip, why is it happening? The best answer can only be Shakepeare-grade hubris. Netanyahu is not in any trouble in this election, and Boehner has to have something else he can use against the President.

Then again, high-stakes games like this can only come from desperation. Both Boehner and Netanyahu probably fear a genuine deal with Iran and may very well know that one is in the works. They would be desperate to head one off for their own political as well as ideological reasons. Nevermind that Netanyahu has warned that Iran is 3-5 years away from making a nuclear bomb for more than 20 years now – it’s his big issue and he clearly believes it’s a critical one.

The worst possible outcome for both Congress and Netanyahu is that the public, once engaged in the issue of Iran, starts to see how beneficial it is for the US to have at least some kind of relations with our long-term enemy. For this trip to backfire this completely everything will have to fall into line and the US press will have to actually do their jobs by reporting in depth on Iran and the developing Shia-Sunni conflict that we are also blindly wading into. But stranger things have happened, and the American public have a limited appetite for more and more war at this point.

Why is this trip happening? Because two politically aligned camps have very narrow, parochial interests and both have the finesse of four year olds. All politics is indeed local, but increasingly it plays out on an international stage. All that’s missing are three witches and an Elizabethan accent for this to play out like MacBeth.

Even without a total failure, however, one or more of the parties is likely to find themselves wishing it never happened. It shouldn’t happen for that reason alone, let alone the massive breach of protocol.

Filed under: Nooze, Politics]]>http://erikhare.com/2015/01/26/bibi-comes-to-washington/feed/17wabbitoidNetanyahu simply looks like a hard-liner.The last foreign leader who could tell us what to do. He's been dead for 50 years.The US is already war-weary. The last place we want to go into deeper is Israel.Hassan Rouhani, President of Iran. He is not a reliable bogeyman, but can we go as far as to make peace with him?The Nightly Showhttp://erikhare.com/2015/01/23/the-nightly-show/
http://erikhare.com/2015/01/23/the-nightly-show/#commentsFri, 23 Jan 2015 00:05:08 +0000http://erikhare.com/?p=6408]]>How will America ever get over the racial divide? It’s going to take honesty, bravery, and humor – with an emphasis on the “get over” part more than the “racial” part. It’s going to take a venue where the bizzy blur of daily events has some space where people can breathe, think, listen, and then react – and feel comfortable enough to laugh about it.

Just when the limits of humor were tested with the Charlie Hebdo attack, which left us all to question not just what is right but what is funny, along came The Nightly Show with Larry Wilmore. It proves once again that Comedy Central isn’t really all that funny sometimes, which is the highest complement anyone can give it.

The Nightly Show is 100% Real, and sometimes it just hurts. We need that more than a laugh.

The opening for Wilmore came when faux conservative pundit Steven Colbert took the gig to replace David Letterman, giving up his 11:30PM (Eastern) slot. It was hard to imagine how Wilmore would replace Colbert, given the latter’s unquestioned role as the King of Satire. His whole shtick was a joke that lambasted the fake news machine that spews purest BS across our daily news diet.

Wilmore could have taken his show in many directions. He’s not a satirist by nature, despite his sometimes coldly acid observations about the plight of Black America earned over 54 years of livin’ it. He could have done a news comedy show that was only incidentally African American, as he certainly has the chops to comment on just about anything. He’s a smart, quick, and gifted comedian.

Instead, he has given us a show that is undeniably, bravely Black. It opens with his own routine on the news, giving us a dose of his cynical and biting observations. Noting that some movies were robbed when it came time for Oscar nominations, he played a clip of the (not nominated) Lego Movie – and followed it with, “Oh, black people didn’t get nominated for an Oscar? [Yawn] Yeah I’m mad, I guess.”

Wilmore takes on Cosby. “How many women have to accuse him before we accept it?”

What was great about this is that this is exactly the response most Black people have to the many slights that they experience daily, let alone at the Oscars. There’s only so much outrage you can have about the Way Things Are once you get used to it.

Where the show gets into the heart of Black America, however, is with the four guests making up a panel at the end. Wilmore has already taken on Bill Cosby with his panel. “Tonight we are talking about Cosby,” Wilmore said. “We’re answering the question, did he do it? The answer will be yes.”

The panel concludes with Wilmore asking his panelists questions that they have to answer by keepin’ it 100% Real. If they do so, by the audiences applause, they get a card that says, “I was 100%”. If they don’t, they get a tea bag for their weak tea. It’s as Black as the hook at the Apollo in the way it doesn’t put up with crap, and itself completely real. It’s the missing element in discussions about race and it comes in a place that doesn’t have to bother itself with the ubiquitous White Perspective.

Wilmore with Sen Corey Booker (D-NJ) on his panel. He is the first, and probably the last, politician on The Nightly Show.

The panelists are there to represent themselves, not their race. If that doesn’t sound like a huge breakthrough to you, then you’re not paying attention to American media today (good for you!).

Wilmore’s show, overall, really isn’t that funny. It’s just funny enough to belong on Comedy Central, but the real payoff hits too hard to be laugh out loud. I still believe that Comedy Central can do more for race relations, however. I want to see a panel discussion on race with Chapelle, Foxworthy, Key, Peele, Larry the Cable Guy, and Fluffy. They’d bust on each other the way people do in real life and do more to help us all get over ourselves, and our races, than anything else.

In the meantime, we have The Nightly Show with Larry Wilmore. Can America get over the racial divide? First, we have to get over ourselves. A space where Black Americans can talk openly and keep it 100% with all of America, white and black, peering in makes for a fantastic start. It’s a great gift that can only help the whole nation do what has to be done.

Is it funny? You be the judge because you simply have to watch The Nightly Show. Just keep it 100% when you do, OK?

Filed under: People & Culture]]>http://erikhare.com/2015/01/23/the-nightly-show/feed/16wabbitoidLarry Wilmore's classic "What did you expect?" look. The real face of Black America, 100%.Wilmore takes on Cosby. "How many women have to accuse him before we accept it?"Wilmore with Sen Corey Booker (D-NJ) on his panel. He is the first, and probably the last, politician on The Nightly Show.Why Economics?http://erikhare.com/2015/01/21/why-economics/
http://erikhare.com/2015/01/21/why-economics/#commentsWed, 21 Jan 2015 02:52:55 +0000http://erikhare.com/?p=6404]]>For all the thousands of words forming complex observations, theories, and predictions it takes a really simple question to stump Barataria. Buried within just the right blank stare of a few words is often hidden some basic wisdom that questions the assumptions long taken as unprovable facts. Isn’t the Emperor naked after all? Such a question came in response to a recent post, as posed by “kikila”:

Finally (I hope) someone who can explain why the economy is important to me!

It’s less of a question than a question about the fundamental underpinnings of our world. Why does economics matter? He elaborates, “I have a theory that this is intrinsically linked to ideology and the false concept that a free economy = freedom (the mainstay of the neo-liberal line for decades). Moreover, that ideological systems have coopted the notion of democracy, linking the idea of political involvement directly and indelibly with the idea that one day, eventually (you say 2017) the economy will begin to benefit (the) people.”

More like centuries of not-so-neo liberal thought, but let’s dig in. Why should we care?

Don’t make those in need have to reach for it.

The Barataria answer comes with its own basic assumptions. The first is that this thing we call an “economy” is nothing more than the sum total of the values of the people involved expressed through the course of their daily life. “Values” and “value” seem like two very different things, but when it comes to plunking down what you give 40 hours a week to earn people express what they really believe in far more honestly than any pollster could dream of.

The second assumption is that how hard it is for people to make that money has a lot to do with how they express themselves. We all have values, yes, but we also have to eat. There is a huge difference between surviving and thriving when it comes to choices. The more people can think in the long term the more we see who they really are. Add that up over a few hundred million people and the force is tremendous.

You may not care about “the economy” in your daily life. You might have things other than money that you value, digging up the scratch you have to where you can, working as many hours as you have to. You might believe that your future is dependent entirely on your own hard work, keeping your nose to the grindstone. Both have their limits.

Many people believe that whoever is in power has a tremendous influence over the economy. It’s largely not true. The economy does change politics based on this belief as the man in charge (so far, always a man) gets the blame when things go bad. Similarly, people who feel good tend to be more interested in positive social change when they are out of survival mode.

Major social change tends to occur in good times for this reason. Hard times amplify the need for change, but it’s not until people feel flush enough to focus on the world around them that it really sinks in. That’s why the period of time we are entering is a critical one. We know that the systems of the economy are working again, but for whom? Once voters start to ask that question, and expect a good answer, we can expect the fruits of a new economy to start to be shared more equitably.

Then again, getting people to ask that question is the hard part.

Organizers for social change would be wise to understand where we are in history if they want to make a difference. If we are poised for better times ahead then this is a time to organize for the long haul. Don’t expect quick victories and don’t use tactics that burn people out. You need to develop capacity and leadership to build the movement that will lead to change. You have time to make your case, so make it clearly and eloquently.

But is it all a sham, a failed promise brought by the false ideology of a “free market”?

One Big Marketplace

I believe very strongly that the US in particular is not a capitalist nation but a marketist nation. The difference is critical and explained in detail in this post. The problem with the “free market” is that it is an ideal, not a natural order. It takes tradition, social agreement, regulation, and stability in fundamental systems of money and government to work properly.

Politics can influence the economy largely to the extent it can screw everything up. When there is a disconnect, as there is now, stagnation in politics upsets the dynamic needs of a truly market based system that is based on the ultimate value of this or any other nation – the talents of its citizens.

Why does economics matter? It illuminates the values of people in ways that are as revealing as the Emperor called out by a naive little boy in the fairy tale.

A truly free market that genuinely benefits everyone requires active participation on many levels. It is tied to democracy for a very good reason – because without a truly open, democratic system there can be no free market.

Many hands make the work lighter. Connections make things happen.

Those who want to have a more capitalist system, where money makes the rules, will always favor a politics of division along utterly meaningless lines – such as today’s “left” and “right” and the nonsense that comes along with them.

Why should anyone care about economics? Because we all have to eat, and we all have to live with each other. If we want a better world we have to understand where everyone is and when there is an opening for genuine social change.

I happen to think a rare opening is coming. Not now, but very soon. It’s worth organizing for and asking the really dumb questions that get to all of our basic assumptions.

Kikala, thanks for asking!

Filed under: Money, People & Culture]]>http://erikhare.com/2015/01/21/why-economics/feed/9wabbitoidDon't make those in need have to reach for it.Progress would be good, yes.One Big MarketplaceMany hands make the work lighter. Connections make things happen.Franc-ly You Must be Kiddinghttp://erikhare.com/2015/01/19/franc-ly-you-must-be-kidding/
http://erikhare.com/2015/01/19/franc-ly-you-must-be-kidding/#commentsMon, 19 Jan 2015 01:56:35 +0000http://erikhare.com/?p=6399]]>Last Friday the ongoing “Currency War” claimed an unlikely casualty – Switzerland, a nation best known for being solid in money and neutral in war. The central bank had to remove the ties to the Euro under pressure from foreign investors and the result was an upward explosion of 39%, before settling in at 15%, in the Swiss Franc (CHF, known by its French name Confédération Helvétique).

That may sound like good news for the alpine nation, and it is if you are holding a lot of CHF in a bank account. But if you make precise equipment or other things that the Alpine nation is known for, your stuff just got 15% more expensive. Managing this situation is going to be a tough one for the Swiss, certainly, but it’s a disaster for those who borrowed money from their famously solid and discreet banks.

It’s also an earthquake that rattles our whole idea of “globalism”.

The Matterhorn, a big stable rock.

What happened is simply this. For years, Switzerland has pegged their currency to the Euro – a smart idea given that they are surrounded by the Eurozone. But as the EU limped along from one crisis to the next, and has now started printing more Euros as weapons in the Currency War, Switzerland remained as stable as the Matterhorn. Try as they could to keep their tie to Europe, it simply became too expensive.

When they let go it was like a stretched rubber band coming back, and it hurts.

The currency war, if you’ll recall, is a race by nations to trash their own currencies in an effort to make their products appear cheaper, thus grabbing a bigger share of the global workforce. The goal is a cheap, worthless currency – not a valuable one. The CHF and Swiss banks are quaintly reliable in this fast and loose time.

That has been good for attracting gamblers who have been looking for risk-free investments, a rare thing in a volatile world. But it’s played havoc on the value of CHF and ruined the Swiss’ own ability to invest.

The Russian government has pretty much given up – on the Ruble, not power.

That’s the real problem with this upward explosion. Many people in nations with unreliable banks that are forced to require high interest rates have been borrowing in CHF because it seemed like a sensible thing to do. In Russia, for example, interest rates for small business loans, when you can get them, are now above 30%. But if you borrowed in CHF your loan payment due in CHF is now 15% higher than it was a week ago.

Russians, in particular, have been hit hard. First the Ruble lost half of its value in the last six months, then this. There are reports of people whose mortgage payments to Swiss banks have tripled. It sure seemed like a good idea when they were taken out, too.

Why did the Swiss Central Bank do this? Couldn’t they just print more CHF and be done with it? They could have, but it would have resulted in inflation and other problems at home eventually. They tried this for a while, buying foreign currency like Euros as fast as they could. It wasn’t enough. All solutions required them to remove their tie to the Euro and wait for it to settle down.

Banking has turned upside down.

The net effect for them is a -0.75% interest rate that may yet have to go to -2.00% in an effort to cheapen CHF back down where it needs to be. Think about it. You have to pay 2% a year for the privilege of having your money in a Swiss Bank. This will happen to counter the rise of the CHF, but it will take time. Meanwhile, you can expect some kind of controlled inflation that the central bank will attempt to carefully manage as the CHF goes back down.

In global terms, this is absolutely devastating. There is simply no truly “safe haven” anywhere in the world and no central bank that can claim to control its own currency. The US Dollar, for example, has been quietly tracking upward. That’s a lot of the reason that oil seems cheaper to us – where it is 50% less than a year ago in US Dollar terms, it’s only down 20% in Euro terms. It’s as much that the buck has gained as oil has dropped.

When currencies break, supply chains can break with them.

That is why manufacturers have a real problem on their hands. It may be tempting for a US manufacturer to source parts from a nation where they appear cheaper, but in a time of currency volatility it becomes much harder to guarantee the price and availability due to currency translation. Local sourcing might seem more expensive now, but defying global supply chains has some insurance that comes along with the higher price tag.

In the meantime, investors and borrowers across the sketchier parts of Europe are trying to figure out what comes next now that everything seems to have changed in one day. What will happen to CHF over the long haul? What will happen to anything?

That’s why the real casualty in the currency war isn’t Switzerland, it’s globalism. And that must strike fear in every institution and system that has been better on an ever smaller world for the last several decades.

Filed under: Money, Nooze]]>http://erikhare.com/2015/01/19/franc-ly-you-must-be-kidding/feed/8wabbitoidThe Matterhorn, a big stable rock.The Russian government has pretty much given up - on the Ruble, not power.Banking has turned upside down.When currencies break, supply chains can break with them.Do You Get It?http://erikhare.com/2015/01/16/do-you-get-it/
http://erikhare.com/2015/01/16/do-you-get-it/#commentsFri, 16 Jan 2015 00:05:26 +0000http://erikhare.com/?p=6394]]>The Charlie Hebdo comics raise a lot of questions. Is it acceptable to deliberately offend people? Does free expression trump hurt feelings? Should there be an exemption for faith, a place where speech should be limited?

But there’s an even more immediate question: are the comics funny?

Not being French, I’ll never understand the French sense of humor. It tends to be deep, biting, satirical, and … well, not exactly laugh-out-loud. Good satire is often not really funny as much as painful, after all. Then again, bullets are even more painful.

Was that last comment satirical or just in bad taste?

Alan Alda as Lester in “Crimes and Misdemeanors”.

There is a famous routine in “Crimes and Misdemeanors” where Alan Alda’s character goes on and on how comedy is tragedy plus time. He elaborates that Lincoln’s assassination wasn’t funny at the time, but now we can laugh about it. What’s funny about the shtick is that it is painfully not funny as an analysis of what funny is in the first place. That makes it funny. It’s also in a Woody Allen movie, which isn’t really funny, so the not-funny jokes work at many levels.

This is as close as I get to understanding French humor.

There hasn’t been much time since the tragedy, so gags about it probably don’t work yet. South Park famously declared in “Jared has Aides” that it takes exactly 22.3 years for a tragedy to become funny, a point that AIDS activists disagreed with. Where the deep Gallic sense of satire has an advantage is that it probably is just about as funny right after a tragedy as it is after time (which is to say, not funny).

Matt & Trey of South Park.

Which takes us to the issue at hands – images of Mohammad used for comedy. Outside of their shock value, the cartoons in question were not really all that funny on their own. It’s a lot like its rough American equivalent, South Park, in that the response is where the joke lies. You effectively write the punchline by imagining how upset someone else gets about it.

I watch South Park, I have to admit. When it hits, it his hard. When it doesn’t hit it’s really stupid and unwatchable. The parts that are offensive just for the purpose of offending? Sorry, I can’t go there. It seems really juvenile and pointless to me.

Ultimately, I can’t say that Charlie Hebdo comics work for me, either. It’s not a French thang, really, because in a perfectly American context I also don’t get that kind of humor.

Ducks are always funny.

Do I think it has a right to exist? Yes. And I have a right to not laugh at it and say, “This is really stupid.” They have a right to laugh at me for not getting it, too. And I have a right to … oh, nevermind. Humor is in the belly of the beholder, like the bullets are. Or is it still too soon? The way I’m rambling on I thought some time had passed.

Perhaps one day we’ll all be able to look back on this and laugh at how anyone ever found these comics offensive in the first place. That may be the ultimate joke, the one that really is tragedy plus time. Somehow, I doubt it. It’s hard to make jokes about World War II still, which is why “Hogan’s Heroes” seems even stranger with the passage of time. Whose idea was that show, anyway?

As the world comes closer together, we can probably guess that everyone will continue to become more sensitive about things until one day when we suddenly all stop caring about it and get over ourselves. The more we draw lines where people can’t go the more room there is for “satirists” to do things that aren’t funny in the name of being funny just because it all plays out that way.

I’d rather live in a world that doesn’t need satire, thank you. Until then, let the jokesters continue to fire their ammo.

(still too soon for bullet jokes?)

Filed under: Nooze, People & Culture]]>http://erikhare.com/2015/01/16/do-you-get-it/feed/8wabbitoidAlan Alda as Lester in "Crimes and Misdemeanors". Matt & Trey of South Park. Ducks are always funny.Forward! 2015 & Beyondhttp://erikhare.com/2015/01/14/forward-into-2015-and-beyond/
http://erikhare.com/2015/01/14/forward-into-2015-and-beyond/#commentsWed, 14 Jan 2015 00:05:41 +0000http://erikhare.com/?p=6386]]>How will the economy perform in 2015? In many ways, it’s a lot like the weather. The first guess is that we should expect more of the same from 2014, which is to say a steady improvement. Last year was a turning point for many people as the bottom hit five years ago was finally shaken off. Progress was made overall – it’s really a question of who benefited and who will continue to benefit.

But when putting together an economic forecast for the coming year something stands out that is quite remarkable. There are hardly any trends for 2015 that should not be important in 2016 as well. Understanding why takes Barataria back to the fundamental principles, theories really, that have guided our understanding of the economy and where it is going.

It has been Barataria’s contention since 2008 that we are in the middle of an economic event that is best described as a Depression, as outlined in detail in two separate postings, the second as an update. This appears to have started at the end of 2000, but history may mark it arriving with 9/11. Barataria refers to it as a “Managed Depression” because the systems that are supposed to prevent a repeat of the Great Depression of 1929 largely worked, creating a small recovery by 2006.

Since depression conditions continued, this took the form of a bubble of excess capacity in finance, housing, and commodities, so the management was not perfectly effective. The larger collapse of 2008, seen as early as 2007, finally showed the limits of our ability to manage the economy.

It’s worth noting here that Europe chose austerity over prudent Keynesianism, and should remain in depression longer as a penalty for their decision.

There are many reasons for depressions, but they are a periodic event in history and a part of general business cycle theory. In grander terms, they are known as K-Waves after the first person to chart them, Nikolai Kondratieff. If everything goes according to the pattern the Managed Depression of 2000 should last as long as the previous period of expansion, which was about 17 years – putting an end date around 2017.

Nearly everything converges on 2017, which Barataria has come to refer to as “The Year Everything Changes”. There will be a new President, for sure. It will also be the year that the peak Baby Boom, born 1952-1956, hits 65 years old and starts retiring. And if job gains continue at nothing better than the rate laid down in 2014, we will be at or near a condition of “full employment” – with upward pressure on wages for working families for the first time in 20 years.

The realization that inflation should remain tame through at least 2015, if not longer, only improves this claim. Interest rates should remain historically low even as the economy picks up. What remains lacking right now is faith that good times are coming and attitudes change only slowly – but when they do we can expect credit to shake loose for promising new ventures.

As rosy as this sounds, there is still some downside. A strong US Dollar means corporate profits will be down as income from outside the US is converted into fewer bucks on the bottom line. That will limit the necessary hiring that corporations still have not done to prepare for a genuine boom. The stock market should underperform, or at least cool off considerably as it moves more or less sideways in reaction.

Who will replace him when he’s ready to rest?

There is also the potential for a widening “skills gap” as the Boomers retire. Education is going to be very important over the next two years, as President Obama has anticipated with his plan for free community / technical college.

What does this all mean for 2015 and beyond? With 2014 as the year in which people started to see improvement they could believe in and 2017 as the year everything changes, the next two years should stand together as the bridge between.

Look for improvement in wages and even booms for certain skill sets. Income inequality should start to improve, at least for the working end of the middle class, but political pressure is only likely to increase on this issue. The wave of retirees will start to strain budgets, but we should first see government budgets improve dramatically and new public spending come, especially in infrastructure.

The Federal deficit will continue to fall and may even turn into surplus, with absolutely everyone taking credit for it.

All of these things are not just trends for this year, but should continue into the next barring some general economic collapse. The politics of the next year should change as much as the economy did in the previous four years, as politics typically lags the economy (and certainly doesn’t lead it). But that is a complex subject for another post.

There are many links to articles on the concepts explained here. If you have questions about the reasoning or think Barataria is just plain wrong, please follow the links for more information. Thanks!

Filed under: Money, Nooze]]>http://erikhare.com/2015/01/14/forward-into-2015-and-beyond/feed/17wabbitoiddepressionSomeone new will take the oath in 2017. Will it be Hillary Clinton?Who will replace him when he's ready to rest?Inflation? Naw.http://erikhare.com/2015/01/12/inflation-naw/
http://erikhare.com/2015/01/12/inflation-naw/#commentsMon, 12 Jan 2015 03:00:00 +0000http://erikhare.com/?p=6381]]>After years of low interest rates and quantitative easing that amounts to more or less printing $4.5T, it would be easy to predict that inflation is bound to rise eventually. More dollars means, by supply and demand, that they have to be worth less, yes?

But the opposite is happening as the US economy charges ahead as the strongest economy in the developed world. While we have stopped stimulating our economy, Japan and Europe are only accelerating their programs. The US is poised to lose the currency war with the strongest currency standing – and a guarantee of lower prices for a lot more than just gasoline in the near future.

What keeps the global economy keepin’ on.

The strengthening of the US Dollar comes as pressure grows on the Federal Reserve to raise interest rates above a nominal zero Fed Funds Rate for the first time since 2009. Most analysts agree that it has this has to come by April, increasing along with it rates for everything from cars to homes and even credit cards.

This will only increase the value of the Dollar, which has been on a huge run lately. It’s up 13% against the Euro over the last year. It’s also likely that this trend will continue as the Euro and the US Dollar move towards parity, which could come as early as 2015.

US Dollars per Euro over the last year, from Oanda.com

Ready for a trip to Europe? It’s 13% cheaper than last year and falling.

Because nearly every commodity is priced in US Dollars, the price of nearly everything is likely to keep falling, too. This could easily pick up steam as the greenback’s gains continue. It’s likely to be the story of 2015 as our currency gains throughout the world.

In historic terms, it has a long way to go, too. Below is the US Dollar Index, a measure of the strength of our currency against a basket of other currencies weighted by how much trade we do with them. We’re nowhere near the level of strength we enjoyed back in 2000, before the recent Depression started, despite the recent increase:

The US Dollar Index since 2000, from the St Louis Federal Reserve. The recent gains have room to continue in historic terms.

The only thing that doesn’t seem to be getting cheaper against the US Dollar is gold, which has been rising lately. The same pressure for a safe haven investment is also increasing the yellow stuff, which is rising just a bit faster than the green stuff lately.

Where are all those containers going?

Where will this end? The short answer is that there is no reason to believe it should end any time soon because there is no reason to have any faith in the economies of other developed nations. A general slowdown also appears to be gripping global trade, which is not increasing as quickly as it did over the last four years, meaning the developing world isn’t going to pick up quickly either.

While this means great bargains are coming for US consumers and a Eurotrip is going to be the hot feature of the summer, it’s a dangerous thing for the economy. Like any other nation, we benefit from a weaker currency that makes our goods cheaper and thus encourages hiring. As strong as things have been, we still need jobs. A slowdown in job growth is not going to help us over the long haul.

Predictions of inflation that have been a regular staple of Federal Reserve criticism will not only prove wrong, they will likely prove dangerously wrong. We have exactly the opposite problem as the deflation and stagnation that have plagued Japan and Europe are exported as effectively as their central banks can engineer it.

There will be almost no pressure on the Fed to raise interest rates much in the coming year, tempting as it may be to remove the punch bowl before the part starts. The years of stimulus and cheap money are likely to continue until there is a growth in global demand no matter what we do.

And that’s more likely to come from the developing world than anywhere else, especially if the US economy continues to expand. Inflation? Just the opposite is likely. How this shakes out is going to be the story of the coming year.

Filed under: Money, Nooze]]>http://erikhare.com/2015/01/12/inflation-naw/feed/10wabbitoidWhat keeps the global economy keepin' on.US Dollars per Euro over the last year, from Oanda.comThe US Dollar Index since 2000, from the St Louis Federal Reserve. The recent gains have room to continue in historic terms.Where are all those containers going?Je Suis Charliehttp://erikhare.com/2015/01/09/je-suis-charlie/
http://erikhare.com/2015/01/09/je-suis-charlie/#commentsFri, 09 Jan 2015 00:05:25 +0000http://erikhare.com/?p=6364]]>Another terrorist attack by Islamic fundamentalists strikes at a great Western institution. More than fragile human bodies, the target is picked out of revenge and the sense of fear it is supposed to instill. But this time, it was not a seat of power or finance that was hit – it was our values.

Free expression is a central value throughout the western world, only accepted after centuries of struggle and violence. It is something that we hold as a “certain unalienable right” at the core of who we are as a people. What exactly that means, however, has been an important question long before these anti-Western reactionaries committed their despicable act.

The cartoon magazine that was targeted because it once ran cartoons of the Prophet Mohammed, a blasphemy in the eyes of Islam. The murder of 12 people was a direct result of that, an act of revenge for Charlie Hebdo’s act of expression. If we are to say that we truly value free expression we must stand together as a people and denounce what was done. Free expression must remain free.

We have experienced in the US people who were fired or targeted for expressing how they felt about certain subjects. The reactions were always visceral, as could be expected for something so fundamental. No matter how badly it sat at the end, however, most of us had to reluctantly agree that while free expression is extremely important, it does not shield any of us from the consequences of our actions.

But a line is crossed when the consequences for what we say include terror and death.

The problem with this is that anyone who wants to kill you, or at least make your life miserable, probably can as long as they value that more than their own life. In the US, advanced weapons are commonly available and often regarded as another fundamental right. Internationally, it’s even more dangerous, with relatively small numbers of fundamentalists often gaining access to powerful weapons that allow them to create a lot of mayhem. The militants who struck at Charlie Hebdo’s office were certainly ready to die for their act – which made them, or any number of people like them, nearly impossible to stop.

Free Speech, from Norman Rockwell’s Four Freedoms series. We don’t live in this kind of world anymore.

Our fundamental Western values, as strongly as we want to protect them, cannot constantly be defended in this world. There is absolutely no way that we can guarantee anyone truly free expression without abhorrent consequences, no matter how much we want to think otherwise.

This is the result of a world that is coming together in ways that are uneven and unpredictable. The Islamic world does not have the same values we do, nor do many other non-Western people. This is understandable given that we only recently accepted free expression as a universal right, and that only after many had died fighting for it. In this new world, more blood will have to be shed to expand that right and make this value truly universal – and there is probably no other way it will come down. There was a horrific inevitability in this attack along with a prediction of much more to come.

Even though insults and attacks are being hurled at Muslims by right wing bigots and secular extremists, Islam does not condone the killing of innocents or even random assassination of people who have drawn pictures or made statements against Allah and His Messenger. The killings in Paris today have to be condemned by the whole Muslim world and extremism has to be opposed. Almighty Allah tells us:
“Invite (all) to the way of your Lord with wisdom and beautiful preaching, and argue with them in ways that are best and most gracious: surely your Lord knows best who have strayed from His Path and who have received guidance.” (16:125)
A true Islamic State should be a place of peace, stability and tolerance; not chaos, hated and wanton killing!!!

This fundamental value we hold so dear in the West can, indeed, be found in the Q’uran itself. There is hope for our worlds to come together peacefully one day, as unlikely as that seems now.

A little respect goes a long way.

On a personal note, I find this event especially difficult. I make a point of being as kind and respectful as possible in every moment of my life, apologizing quickly and sincerely when I do offend. The original cartoon was not something I would have ever defended on the grounds that I do not find deliberate provocation or insult to be funny in any way at all. That may make me a coward in the eyes of some, and I accept that. But now that a line has been crossed and a simple insult has been met with a horrible act of terrorism, I have to stand with free expression. Je suis Charlie today.

This is what is so tricky about fundamental social values like free expression. Perhaps I should more vigorously defend everyone else’s expression as a basic right that we all must hold. For me, my words are often limited by my desire to not offend and keep channels of communication open even with those with whom I very much disagree. As a society, however, the fundamental value has to be more absolute. What I value and what society values are often different. Without this understanding, free expression is usually little more than a threat.

In this world, drawn closer every day, this value and open communication is critical to finding peace among the many peoples with many different values.

You can’t force respect.

How can this all work? The bumpersticker sometimes displayed by those who value gun rights states that “An armed society is a polite society”. This has proven far from true. Yes, free expression has to be valued, cherished, and even defended. Yet it also has to include room for respect, though that respect cannot be enforced by the iron barrel of a gun. It has to come from the heart.

This act of terrorism has challenged both the Islamic and Western worlds in critical ways. The Islamic world needs to reach into its heart and find a way to walk among infidels without allowing any of their number to pollute their faith with violence. It’s a nearly impossible task. The Western world needs to defend free expression with the passion a fundamental right requires while also finding room for respect. It’s also a very difficult thing to do.

But we must both do this because every day we come closer together, more and more sharing only one world. That world has to be created in peace and justice, not murder and revenge. Will that take as many centuries as the struggle for basic rights took in the West? I hope not, because I hope to live to see it. I hope to be a part of creating it.

Filed under: Nooze, People & Culture]]>http://erikhare.com/2015/01/09/je-suis-charlie/feed/15wabbitoidCharlieFree Speech, from Norman Rockwell's Four Freedoms series. We don't live in this kind of world anymore.A little respect goes a long way.You can't force respect.Strategy as Leadershiphttp://erikhare.com/2015/01/07/strategy-as-leadership/
http://erikhare.com/2015/01/07/strategy-as-leadership/#commentsWed, 07 Jan 2015 04:21:24 +0000http://erikhare.com/?p=6360]]>Leadership. There has been a lot of talk about it lately, or more to the point the lack of it. In common talk it is defined as “Doing or standing for the things I like” far more often than is useful.

There is a horrible lack of leadership everywhere in the developed world right now. Can anyone name a powerful nation with good leadership? Perhaps you can name a few businesses that have it, but not many. How about social leadership? Religious leadership? Are there more than a few people in rich nations anywhere who have a strong following that is capable of getting done what they want or need to?

Then again, the lack of leadership is hardly surprising. It is not about a charismatic figure that molds the masses to action – it’s about getting things done. That requires strategic thinking, and strategy is something horribly under-appreciated. I might chalk that up to excessive selfishness or a failure of moral character in our world, both of which are issues. But upon reflection, it seems to come down to a lack of understanding of what Strategy is and why it is important.

The military teaches strategy as much as leadership. They are often the same, too.

Teaching strategic thinking is not impossible. People who have served in our military, especially as officers, have been through programs that teach how to be strategic and achieve goals. They tend to be very different from the general population as a result – and invaluable to us all. I do not know how this is done, and would appreciate feedback from anyone who can help.

What I can give you are counter-examples of horrible failure, starting with Washington. But the best example has to be Occupy Wall Street, a group that deliberately refused to be strategic and eschewed the very idea of “leadership”. Their failure to accomplish anything must be pointed out as foretold in their attitude. Yet that attitude is very common among young people who have seen leadership abused and come to think of it as personality driven. It’s not. A good strategy can develop its own leadership organically.

Let’s start with what I mean. To get something done you have to start with a Goal. It’s something you want to do, to change, to achieve. I’m not talking about a “vision statement” full of buzzwords – the only good vision I’ve ever seen was Microsoft’s circa 1982 – “A computer on every desktop”. That was a vision, but for all its power it still only defined the Goal. A successful organization or campaign always keeps its “Eyes on the Prize”. What are we trying to do here?

A good roadmap is what strategy is all about.

That brings us easily to Strategy, which is little more than the roadmap between where you are and the goal. That may seem like a very passive way to look at it, but a Strategy is rather passive. It should only change when there is new intelligence about the lay of the land and where danger lurks.

Finally, there are Tactics, which are how you advance through that map towards the Goal. They are the action, but they are born in the more passive coolness of the Strategy.

The separation between Strategy and Tactics is what usually trips people up. For example, the Senate Republicans had been blocking everything that came their way. This is not a Strategy, it is a Tactic. It says nothing about the obstacles coming or the path that has to be taken. A Strategy is about what is beyond you, not what you do. The lack of that understanding renders Tactics to rote, such as blocking everything – a passive exercise where there should be action.

How did we get this way? This is what may be inherent in the long-wave cycles which run about a lifetime in length. In good times, people learn to keep on keepin’ on, doing the things that have always been successful. Why not? As long as they work it makes sense. But what happens when everything changes? Strategy is about the territory ahead, and when that is unrecognized Tactics often fail to advance – that’s when we enter the “Winter” or Depression stage as we are in now. Passive behavior turns into survival mode. The only viable solution is a new Strategy, which is to say a new lay of the land.

Charismatic leadership has become an excuse for excess. We’ve outgrown it.

This may seem to be very far away from the concept of Leadership, but it is not. Separating the functions of Leadership from the personalities shows how it can become what Occupy really wanted in the first place – more democratic and open. That implies that everyone understands the shared Goal, but more importantly that they understand how Strategy itself works.

What is Leadership? It is an understanding of how to organize and accomplish things in a complex world. The lack of leadership we see at the top is merely a reflection of the lack of understanding of leadership throughout our society, which is to say how to think strategically.

In the new economy that is forming through the restructuring process, not through a “recovery” event, there will likely be a new vision of what leadership is. It’s already happening, too. Something more open is essential, especially as corporations rely more and more on contract employees for specific tasks. That implies being goal oriented, which is to say being strategic. You hire the best talent and set them free – and the leader of the team is the person who provides the strategic focus.

This may also be more democratic in a flatter structure, too, depending on many cultural values and how they change.

Such a new vision of leadership is obviously permeating not just corporate America but also the non-profit world. It will have to be put to work in government as well, where employees will have to be judged on their ability to meet goals rather than simply enforce regulations. That won’t be easy, but that reform is going to have to take place.

A greater understanding of the new leadership styles and the need for strategy is one of the skills that has to permeate all levels of our world before the restructuring unwinds and the new economy can take flight. The more we can talk about this and what it means the better off we will be as we move forward into a new world.

Filed under: People & Culture]]>http://erikhare.com/2015/01/07/strategy-as-leadership/feed/17wabbitoidmilitaryA good roadmap is what strategy is all about.Charismatic leadership has become an excuse for excess. We've outgrown it.Boehner’s Big Wave – Goodbye?http://erikhare.com/2015/01/05/boehners-big-wave-goodbye/
http://erikhare.com/2015/01/05/boehners-big-wave-goodbye/#commentsMon, 05 Jan 2015 01:57:48 +0000http://erikhare.com/?p=6352]]>In most of the world, the one thing we can be sure of is constant change. In the US House, we have come to rely on inaction in the face of change as Speaker Boehner stood resolutely in charge of a body too fractured to do anything. As comedian Dave Allen observed, “When you’re up to your bottom lip in muck, there is only one rule – don’t make waves.”

A big wave is about to come through the US House as Boehner faces a serious challenge from the Tea Party wing of the party. So far, two Representatives, Louis Gohmert (R-TX) and Ted Yoho (R-FL) have announced they are challenging him. How exactly it will shake out is anyone’s guess, but something is about to happen. Make popcorn.

It’s enough to make Boehner cry. Wait, no it’s not.

The tenure of Boehner (R-OH) has been a very difficult one at best. The fractured nature of the US House has caused a collapse that has passed remarkably unheralded as the body became paralyzed by indecision. Normally this would have been cause for great alarm, but for some reason no one has seriously made political points out of it. Things have been left to coast along since 2011 with no challenges from the left, right, or center.

Personally, my rap against Boehner has nothing to do with his politics. He has proven to be an utterly incompetent Speaker in the most fundamental way possible and should have been cast aside long ago. If the US House were to accomplish one thing every year it would be to pass an actual budget to pass on to the Senate – whatever may happen to it there. They haven’t been able to do that in Boehner’s entire tenure, relying instead on “continuing resolutions” that simply keep the government keepin’ on.

By missing his most basic responsibility year after year, Boehner can only be judged as a failure.

Rep Gohmert has his eye on something. I’m not sure I want to know what.

But that’s not the issue at hand in this challenge. Instead it’s a general frustration by the Tea Party, who has seen Boehner punt on everything that they hold dear. That includes defunding Obamacare, taking a tough stand on immigration, and a host of similar assaults on President Obama’s positions that never passed more than the symbolic stage. They have a right to be upset even if their positions are not necessarily popular.

The procedure in front of us is this: the election of a Speaker is done by a majority of the US House. If no one wins a majority of the ballots cast (that is, 435 minus those voting “present” or simply not there) they have another ballot until someone is elected. If only 30 Republicans vote for someone other than Boehner, they keep voting.

In the last election, 48 Tea Party endorsed candidates won seats in the House. If they remain solid there will be no Speaker on the first ballot. It is presumed by many people that if he fails on the first ballot Boehner will withdraw in favor of someone else, but that is far from assured. It is also hard to imagine anyone who would be acceptable to the establishment Republicans and the Tea Party at this time, so where this is going to go is anyone’s guess.

Jon Stewart, the only for sure winner, plots his next move.

Gohmert, for his part, is a founder of the Tea Party Caucus – a group that despite a few attempts to revive it has become very dormant. Gohmert, along with co-founder Michele Bachmann (R-MN, now retired) has always been more of a show-boater than an organizer. He is, without a doubt, quite crazy – my favorite “Gohmertism” was when he compared gun control to bestiality. The stuff he says is famously fodder for the Daily Show with Jon Stewart.

He cannot possibly have a chance to become Speaker. But Tea Party endorsed candidates have to worry about their base and will have a lot of trouble not endorsing him. The scenarios that are likely to play out look something like this:

Scenario 1: Gohmert and Yoho do not have the votes to block Boehner and he is re-elected Speaker. In this scenario, the Tea Party loses any clout they may have and Boehner has a freer hand.

Scenario 2: Boehner is blocked and the Establishment puts forward another candidate who eventually wins. No one knows who that may be, but Paul Ryan (R-WI) is a leading possibility. The new Speaker has an even worse hand than Boehner did, almost certainly requiring a deal to win.

Scenario 3: The election goes on to many, many ballots and the moderates of both parties broker a deal that leaves both the Tea Party and the Establishment out in the cold. This has to be a longshot at best, but it would be fascinating.

For all the fuss and noise that Tea Party Republicans make, they are just 11% of the House. They have just enough power to create chaos or, as the last four years have shown, gridlock. The reasonable, thoughtful Republicans have rarely made the news but there is a near majority of them right now.

Rep Dave Camp. The serious ones have been the first to go.

For example, last year Dave Camp (R-MI), Chairman of the Ways and Means Committee, proposed a tax reform that would clean up a lot of the mess stuffed into the tax code and go a long way towards updating it for a new economy. He then promptly announced his retirement. Where will this sensible reform go? It’s hard to say, but one of the things to watch in the new Congress was what incoming Chair Ryan would do for reform.

In this chaos, we don’t even know if that will be Ryan’s position next week. He may be Speaker or, if he backs the wrong horse, shown the door. Who then will get this powerful post? We don’t know.

What we do know is that a huge shakeup is coming and that is likely to be a good thing. There comes a time in any poker game when all the chips are down and it’s time to show your cards. That time is now.

A wave of change of some kind is coming to the US House, and not a moment too soon. Like many moments of great change that have washed over the US as a whole, we can’t tell exactly where that will lead us in the short term or what the backlash will be in the long term. But it had to happen, and it’s good to get it over with.

But in these waves through the muck, someone is going to windup with a mouthful of it. We just don’t know who yet.

Filed under: Nooze, Politics]]>http://erikhare.com/2015/01/05/boehners-big-wave-goodbye/feed/17wabbitoidIt's enough to make Boehner cry. Wait, no it's not.Rep Gohmert has his eye on something. I'm not sure I want to know what.Jon Stewart, the only for sure winner, plots his next move.Rep Dave Camp. The serious ones have been the first to go.Taking Care of Creationhttp://erikhare.com/2015/01/02/taking-care-of-creation/
http://erikhare.com/2015/01/02/taking-care-of-creation/#commentsFri, 02 Jan 2015 01:07:48 +0000http://erikhare.com/?p=6344]]>A new year is a time to rethink, reset, and recommit. 2014 was a year of transition, where the foundation of a new economy laid in 2013 put grew into the structure that will shelter us in the coming years. But there is more to life than just the economy – and indeed as a reflection of values an economy needs solid direction and purpose.

Enter the need for real leadership, as shown at least in the West by Pope Francis. He has been a consistent champion of the poor and the ravages of a selfish world looking out only for wealth. Beyond that, he is now positioning the Catholic Church to be an advocate for a world that takes care of all of creation. The message is perfectly consistent yet so life changing that it’s hard for many to absorb. But it’s perfect for the new year.

Pope Francis

The encyclical that is coming shortly is expected to deliver in typically blunt language the calling to the faithful to preserve creation. Back in May, he told the crowd assembled in Rome that we must “Safeguard Creation, because if we destroy Creation, Creation will destroy us! Never forget this!”

That sounds like the caretaker St Francis of Assisi, his namesake, so there is a tremendous consistency. But Pope Francis would never leave it at that. He continued:

“Creation is not a property, which we can rule over at will; or, even less, is the property of only a few: Creation is a gift, it is a wonderful gift that God has given us, so that we care for it and we use it for the benefit of all, always with great respect and gratitude.”

Many on the political right in the US are livid at these statements and the coming encyclical that will spell out the details. They have already been angered by this active Pope and his call for economic justice and even his efforts to restore US relations with Cuba. Another issue that separates the Church from the US right is going to be a serious problem for them.

The scene at the Sermon on the Mount. We always get it a bit wrong.

This reminds me of the scene in “Life of Brian” where the crowd at the back of the Sermon on the Mount gets the message from Jesus horribly wrong:
“Did he say ‘blessed are the cheesemakers’?
“It’s not to be taken literally – it refers to all manufacturers of dairy products.”

Second, this is far from the first time a consistent philosophy has been mistaken by a worldly view that can only digest part of the new perspective. In Evangelium Vitae, the Gospel of Life, Pope John Paul II outlined the Church’s stand against abortion – but also against capital punishment and war. The last two are often glossed over.

Lastly, a strong belief in preserving creation is very consistent with a concern for the welfare of all people and the more equitable distribution of the fruits of industrialization. Many poor people throughout the world have to live with environmental disasters which we in the developed world would never tolerate. As Francis said to a meeting with landless peasants in Latin America last October:

“An economic system centred on the god of money needs to plunder nature to sustain the frenetic rhythm of consumption that is inherent to it. The system continues unchanged, since what dominates are the dynamics of an economy and a finance that are lacking in ethics. It is no longer man who commands, but money. Cash commands. The monopolising of lands, deforestation, the appropriation of water, inadequate agro-toxics are some of the evils that tear man from the land of his birth. Climate change, the loss of biodiversity and deforestation are already showing their devastating effects in the great cataclysms we witness.”

As long as we insist that a debate must be between two (flawed) mortals, not ideas, we’re not going to get anywhere new.

In the developed world, the new encyclical will likely be greeted with a rousing debate about the Church’s proper role in fighting climate change. Again, that will miss the point. That will only be one small part of the argument, however.

What Pope Francis will give us is a logical and passionate expansion of the guiding principles for a Godly person – a good Catholic. It will be consistent with a view that we, as guardians of Creation, have obligations that reach beyond our own comfort and riches.

Will the point be utterly missed? Yes, at first. But the more we can restate what Pope Francis is teaching the more we can shift the perspective that frames today’s political debates away from the silly left-right dynamic that describes nothing useful and towards a healthy debate about the kind of world we will share more closely than ever with each passing year.

Leadership, as we need it now, starts with this clarity no matter how difficult it is to change perspective. But an evolving and more intimately connected world needs nothing less. Let us all hope that this is what defines 2015 more than anything else.

Filed under: Nooze, People & Culture]]>http://erikhare.com/2015/01/02/taking-care-of-creation/feed/15wabbitoidPope FrancisThe scene at the Sermon on the Mount. We always get it a bit wrong.Saint John Paul II. Would he approve? Sure.As long as we insist that a debate must be between two (flawed) mortals, not ideas, we're not going to get anywhere new.2014, ex Machinahttp://erikhare.com/2014/12/31/2014-ex-machina/
http://erikhare.com/2014/12/31/2014-ex-machina/#commentsWed, 31 Dec 2014 00:05:27 +0000http://erikhare.com/?p=6337]]>If you had to sum up 2014 in one short sentence, what would it be? Barataria is a blog of social commentary and observation in the largest sense, which naturally includes a lot of politics and economics – the places where the citizens of this great nation express their true values. So for the the purposes of this humble effort, one thing comes clearly to mind for this year:

The system largely works.

That may sound horribly pro-establishment, especially with the terrible failures of the system that made the news this year. Police brutality went unpunished as many people came to fear that there is an open season on their families simply for having the wrong skin color. The Republicans took the Senate easily with a record low turnout, an expression of apathy more than direction.

But this points to the power of the systems we have as much as the successes do, and why the goals looking ahead have to be about getting control so that these mechanisms do what we need them to. The systems work – as they didn’t at all in 2008 and sporadically after that – but for whom?

“This is how it is. Got it?”

If I had to pick one story of the year it would be the tremendous success of Federal Reserve Chair Janet Yellen. A woman became the most powerful person in the world and is, by just about any measure, doing a very good job. There are those who think she is too “dovish”, keeping interest rates too low – and that will change in the next year. But this powerful organization is clearly doing everything it can to create opportunity and set up the next great boomtime, still on schedule to start in 2017.

The best example of her work can be shown in the “Dashboard” that she outlined in Congressional testimony. Not only did she tell the world exactly what she is looking at for signs of progress, she picked very good indicators from the darkest recesses of the economy – the ones that show how the “recovery” so far is not benefiting working people. And through the year there has indeed been great progress as we’ve shown in updates.

Here are the latest numbers, referring to the methodology before where a score of 100 means we have achieved the best we possibly can.

Guage

2Q13

1Q14

2Q14

3Q14

4Q14

U6 Unemployment

5.9

8.9

9.9

10.7

11.5

Long Term Unemployment

3.5

3.6

5.1

6.5

6.5

Workforce Participation

0.0

2.4

0.0

1.2

1.8

Quit Rate

5.5

9.1

9.1

12.7

12.7

Wage Growth

4.8

2.9

5.7

5.7

9.5

Total

19.7

26.9

29.8

36.8

42.1

The Machine keeps turning.

How is this possible? For all of our concerns about wage equity, there is finally a solid uptick in wage growth and an improvement in job creation. We’re still setting up the next boom, so there is two years left before we can all join the party at this rate. But it’s all working very well.

But is everything working well? Of course not. There is still a lot of much needed reform at every level, and that points to the work that has to happen. Where the machinery of our lives is clearly turning once again, will it turn in ways that produce the world we all want to live in? And how can we make it work, or even tell if it’s working, if we don’t clearly spell out what that world looks like?

That’s the downside of this way of looking at things, or at least the challenge ahead. Progressives need to stand up for progress in this changing world, which is to say an improvement in the lives of working people in every sense of the word. It takes a clear vision and it takes leadership that articulates that vision – something we are sorely lacking.

It takes on a different meaning when ya do it right.

What we can say is that with the machinery coming back on line after a few years of sputtering, the need to control it so that we shape our own destiny is more obvious. Divisions along lines of fear, drawn up as income, gender identity, race, political identity, or any of the other pathetic excuses for crappy behavior we slouch into only bring chaos, poverty, and death.

The machines that exist to make things work really showed how powerful they are in 2014. Making them work for us all, as a people, is the next challenge. That requires a clarity of purpose and a commitment to working together, actively making the future our own.

The big story of 2014 only shows us what the big story of 2015 and 2016 has to be. “How we made it all work together” is what I hope to be writing about a year from now. But expect a few ideas about how to bring about that in the next few months.

Because we’re going to have to write the next big story together. The future is going to be ours.

Filed under: Money, Nooze, People & Culture, Politics]]>http://erikhare.com/2014/12/31/2014-ex-machina/feed/10wabbitoid"This is how it is. Got it?"The Machine keeps turning.It takes on a different meaning when ya do it right.Managing Inevitability – The Clinton Storyhttp://erikhare.com/2014/12/29/managing-inevitability-the-clinton-story/
http://erikhare.com/2014/12/29/managing-inevitability-the-clinton-story/#commentsMon, 29 Dec 2014 03:40:10 +0000http://erikhare.com/?p=6331]]>In the stillness of a cold winter day, obligations chilled between frosty holidays, two years stretch out in a lounging recline to define the moment. One is the year past, and the other is the year ahead. For the whirl of politics, defined in soundbites and constant lobbying, the break is an unusual calm for clearer heads.

Next year, 2015, will be the year in which the campaign for a new President takes shape. That will in turn define 2016 in politics and set us up for what is certainly shaping up to indeed be the Year Everything Changes in 2017. For the long journey that will come to define whatever hero we place in the office to define our world at the start of the next boomtime. For all that, it is shaping up to be one person who can take it – if she really does want it.

This next year is likely to be the one that defines Secretary Hillary Clinton, and in so doing may define the next great era of the United States. It’s all about how she manages “inevitability”.

My daughter Thryn coloring in Hillary Clinton’s life.

It’s not as though Clinton hasn’t been here before. If you asked anyone at the turn of 2007 they would have told you she was the frontrunner to be where Obama is today. The experience she gained from that race and everything since then is only part of her package, however. A great place to see her life laid out is in Hillary: The Coloring Book. What better credentials does someone need to prove they are more of a pop icon than just a politician?

And that’s exactly what Clinton is. Her story is one of a generation, starting with her conservative childhood as a Goldwater Girl. She then turned radical, earned a degree at Wellesley, met a charming young man on the go, and gradually assumed the positions of power you would expect from someone like her.

What makes the coloring book fun is not just that it lays out her past but it also predicts the future just by being what it is. Clinton is a symbol for a generation – a woman who has worked her way to the top. Managing inevitability is her biggest problem because everyone has to be gunning for her.

The image that launched “Texts from Hillary”. She’s at her best looking bad-assed.

Of course, there will be a Republican standing in her way. The problems for Jeb Bush or Chris Christie or anyone else moderate enough to stand a chance of winning start with the built-in advantage for Democrats in the Electoral College, which is going to be very hard to overtake. That’s assuming that they can get past their own party’s infighting in the first place.

But first, there will be Democratic challengers. Clinton is still that Goldwater Girl at heart, definitely hawkish and more than a establishment. The same attributes that got us this far, as chronicled in the coloring book, have opened the doors that might now trap her inside.

Then again, what the Democratic Party needs is leadership, difficult as that is for us. To say that Democratic leadership is like herding cats would be unfair to cats because they complain a lot less. But anyone who is likely to challenge Clinton has to know that – starting with the rising star of the party, Sen Warren (D-MA).

Warren, like Clinton, wants to win – for what she believes in.

Several things stand out with Warren right away. First of all, she shows no signs of wanting to be President, staking her claim as an “outsider”. You can take that at her word or see it as a cynical plot to run from the outside if you want. But the dynamic can be viewed from another perspective if you see Warren as a genuine crusader, more concerned with her cause than her own ambition – which I think is accurate.

All Warren has to do is wait until the calls for her to run must be answered and then meet with Clinton. The two could emerge from a meeting and announce that they have the same reform agenda, spelled out in detail. With Warren’s strong endorsement the situation that won a huge majority for ultimate establishment candidate FDR, with the backing of Henry Wallace’s progressive wing, would be in place.

Get your copy today!

Why is Clinton the better choice? Because as an insider, she can get things done. What remains to be seen is how she is sold – which is where the coloring book comes back in to play. Inevitability has to include pop icon status, after all, something Obama achieved first in 2008 when “inevitability” wasn’t managed by Clinton very well.

But this is the challenge for 2015. We have to look back over the last few years and see who has proven themselves, and that points to Clinton. Then, we have to look forward to see how the mantle of inevitability that comes with her status is managed.

We’ll know by a year from now how well it’s going because we can look at the mistakes she made in 2007. Yes, it will play out on the internet in a zillion memes and facebook posts. But it starts with things like Hillary: The Coloring Book. All the details of her life are there, short and to the point. And you can fill in between the lines to add your own detail. It’s fun for the whole family!

That’s how you manage inevitability. 2015 is going to be an interesting time to be a Democrat.

Filed under: Nooze, Politics]]>http://erikhare.com/2014/12/29/managing-inevitability-the-clinton-story/feed/10wabbitoidMy daughter Thryn coloring in Hillary Clinton's life.The image that launched "Texts from Hillary". She's at her best looking bad-assed.Warren, like Clinton, wants to win - for what she believes in.Get your copy today! A Tale of Two Worldshttp://erikhare.com/2014/12/26/a-tale-of-two-worlds/
http://erikhare.com/2014/12/26/a-tale-of-two-worlds/#commentsFri, 26 Dec 2014 00:05:05 +0000http://erikhare.com/?p=6314]]>As good as things are in the US, there is one threat that remains to the strength of our economy – the rest of the world.

Europe is flat, Japan is a basket case, and Russia is just beginning what should become an epic collapse mirrored only by their experience 25 years ago. China may be hitting the wall, which for them is a rate of growth less than 8% per year – it’s a catastrophe when everyone has financed today based on huge expectations for tomorrow.

Yet, for all that, the total product of the planet is expected to grow by 3.8% in 2015. The developing world is picking up the Great Convergence and with US leadership should still take us into the next boomtime in 2017. But there are risks all around us.

Is this the real American Century?

It’s not possible to understate the strength of the US, especially how it shapes expectations for the next two years. Long term unemployment fell (those without work 15 weeks or longer) fell from 5.8M to 4.2M, accounting for 2/3 of the new jobs created this year. At this rate, by the end of 2016 we will have only 1M people as long-term unemployed, roughly the level seen at the end of the last boom in 2000.

But that’s far from true in Europe. Mario Draghi, the head of the European Central Bank (ECB), warned of three factors that are still dragging down the European economy. They are unemployment, falling productivity, and a lack of structural reforms. Read that again if the gravity of the situation isn’t devastating to you. There’s no work, falling output among those with jobs, and a social structure that is leaching off what little they have. It sounds like a spiral of doom.

It’s even worse in Japan, where they face a whole raft of serious problems. For the land of the setting sun, it comes down to an aging population and a government debt that is now 2.5 times larger than their GDP. Their spiral of doom has been going on for 25 years now and, despite Prime Minister Abe’s efforts, is only continuing.

The Russian government has pretty much given up – on the Ruble, not power.

Speaking of a 25 year spiral of doom, or one that’s come back after 25 years, there is always Russia. Bank collapses are just starting now that the people’s faith in their entire banking system is falling like the Ruble. The situation is quite dangerous, helped only by the fact that the collapse coming in the middle of Winter makes it harder for the Bratva’s kleptocratic government to lash out at neighbors. A Russian implosion is a dire Russian problem, yes, but at least it has less effect on the rest of the world.

So how on earth will there be any growth at all in the world? The short answer is that the Great Convergence, or the arrival of developing nations, is picking up steam again. Rather than rely on sales of goods to the developed world they are starting to see their own demand pick up. They can carry on nicely without Europe, thank you very much. The pickup of the US economy will help, of course, and there will be plenty of room for all of us to succeed.

Unless Europe and Japan drag everything down, of course. Or Russia does something very awful.

Can you see the future? Can we hope for order and progress?

With all these threats out there it’s hard to make a good prediction for 2015. If the US is left to its own devices, or simply picks up trade within this hemisphere, we’ll all do well. Oil is cheap not because production has gotten out of line but because conservation has done wonders, along with the weak economies everywhere else. But if that changes, well, 2015 might get more expensive than we plan.

So before we make any predictions for the New Year, we have to lay out the landscape. It’s a very different one than we are used to, but navigating through it is the key to a time of great wealth on the other side of the next two years.

Getting through this will require new allies as our old friends in the developed world continue to falter. The world will have to get smaller, and the gaps between rich and poor will have to narrow. All that will have to happen without any spasms from Russia or China as they trip over their own systems.

How will it all go? Keep your seatbelt securely fastened and do your best to enjoy the ride. There’s a good chance that the future is going to be written in a short time.

Filed under: Money, Nooze]]>http://erikhare.com/2014/12/26/a-tale-of-two-worlds/feed/8wabbitoidIs this the real American Century?The Russian government has pretty much given up - on the Ruble, not power.Can you see the future? Can we hope for order and progress?Happy Christmas, Happy New Yearhttp://erikhare.com/2014/12/24/happy-christmas-happy-new-year/
http://erikhare.com/2014/12/24/happy-christmas-happy-new-year/#commentsWed, 24 Dec 2014 02:34:01 +0000http://erikhare.com/?p=6309]]>The holiday has come. If you’re safely tucked in to your warm winter bed the last thing you may want to think about is shopping. If it ain’t done by now, well, it may not be done. It’s all good. But that is what defines the season for many people and the success of it determines whether or not visions of sugarplums dance in your head about now.

Even if you’re not into the whole rush-rush buying frenzy, a good strong retail season is good for everyone. We can say that this year because if you’d rather think back on the blessings of the year, as any righteous person should, this has been a very good year for the economy. All that remains is for people to accept it and move forward with glad tidings of the season. The shopping sesaon, that is.

Happy shoppers make for a happy Christmas.

We don’t have the results for “Super Saturday”, the last Saturday before Christmas, but anecdotes tell us that it was at least as good as “Black Friday”, if not a bit better. Small stores in particular seem to be doing very well as people search for that perfect gift – the thing that you can’t get anywhere else. That’s a mark of happy shoppers in a good mood, and that’s what we need more than anything.

Locally, Grand Avenue has been lit by red tail lights and glistened with car exhaust every night for at least a week. The spendy shops along it appear to be doing very well.

The National Retail Federation is sticking by their 4.3% gain after the full results for November showed a solid 3.6% gain over 2013. It was hampered by bad weather and a general feeling that it wasn’t Christmas yet, so it was very much in line with predictions. People aren’t bargain hunting as much as before, and that’s the good news.

Low gas prices make people happy.

Why are people so happy? Low gasoline prices are an extra bonus that no one was counting on, but the net gain of over 2.6M jobs in the last year is certainly a help. There isn’t upward pressure on wages yet, so we can’t call this a boomtime. We have a few years to wait before people have good reason to feel very happy with their lot.

But that is certainly coming. This was a year full of great stats but not very good feelings. Christmas should be the time when that changes.

With headline unemployment at 5.8%, down 1.2% over last year, more people have more to spend. That in turn boost retail, who then has more to hire and spend. It all goes around like good cheer and hopefully carries over into 2015 with milder weather and a lot of reason to be optimistic.

This is what the “velocity of money” is all about – how many times a buck turns over in the economy. It’s been crashing hard as the Fed printed more and not much was happening – but with the Quantitative Easing over and a general turnaround we may have reached the bottom.

The broadest measure of Velocity of Money, as MZM.

It’s still not good, with money turning over 1.4 times a year (8.5 months) versus the 2.3 times per year (5 months) you’d expect in a healthy economy. But it is a start, and we should be thankful for it. Is that a bottom we’re painting? Only the new year can tell us, but there is reason to believe it is.

So as we all count our blessings in 2014, for many people there are more around them than last year. That’s a good thing. As we go into 2015 we need to make a few resolutions and predictions for the year – and this is where it will start.

Have a great holiday and may your blessings continue to multiply!

Filed under: Money, Nooze]]>http://erikhare.com/2014/12/24/happy-christmas-happy-new-year/feed/7wabbitoidHappy shoppers make for a happy Christmas.Low gas prices make people happy.MZMVWinter Arrives?http://erikhare.com/2014/12/22/winter-arrives/
http://erikhare.com/2014/12/22/winter-arrives/#commentsMon, 22 Dec 2014 01:49:16 +0000http://erikhare.com/?p=6307]]>It is dark outside when the alarm goes off, not at all a time to wake up. The usual 8 hours and 41 minutes of daylight we can expect on a Winter Solstice is never enough to keep us going, even on a relatively warm and mild December that developed late in the month. Here in Minnesota the sky has been grey and the snow has gone, heralding a brown Christmas with muddy dog prints on the floor with every outing.

But today is the first full day of Winter all the same, even if it doesn’t quite feel like it. The dark tells us so.

This is the end of the year traditionally. The new year should begin at Solstice, as is the ancient European tradition, just as the day begins at midnight. The only reason it doesn’t is that the Romans used a calendar, the Julian, that was off a bit by the time Pope Gregory XIII got around to revising it and everything moved ten days. No matter. The world since the Renaissance has increasingly been what we decree, not what we see.

It is a season for light, leading us to the promise of Spring

For many people, Solstice is a day to make the final preparations for the next 10 days. A lot of people take off their jobs straight through to the New Year. Most people in Minnesota snuggle down safely this entire time, waiting for the time of work and struggle to begin again. This isn’t a time to do anything except figure out just how we want to delight each other and our children with last minute rushing to buy things.

There is a certain magic in the darkness. Traditional stories about the dark include wolves just outside the door waiting to prey on unsuspecting innocents who dare to stray out into it. This time of year, however, nearly all Northern traditions stress the simple magic of being inside and lighting candles to repel the darkness and remember the year that has passed. The short days are weary enough to envelope even jaded adults, not just the naives of fairy tales.

The exact moment of the Solstice

Because it is an interior season, the various holidays that have mashed together into one conglomerate all have the same basic themes. It’s allright, this will pass, time passes, there’s a promise of light and hope at the other end. The great mysteries are all caused by a planet that wobbles just a bit on its axis and throws us all into a deep darkness that is just a bit scary. We need this reassurance ’round midnight as though we need a good story before we go to bed for a bit.

We stress our own imaginations and our man-made shelters because the darkness gets us down. Normally, I laugh at modern man’s need to make him or herself look bigger than we really are. Not this time of year. We can’t help but understand how small we are in the face of much more darkness than light, and are refreshed by the idea that one single candle is indeed much more powerful than any curse thrown into the darkness. These traditions don’t come from our usual arrogance. They come from a very real understanding of our limits as tiny little mortals. That can only be a good thing.

Sol Invictus, from which we get many Christmas traditions

In my immediate family, we make a big deal of the Solstice, a day apart from the holiday everyone else has. You can join us at the exact moment when Earth wobbles over and points us right out into space, away from the warmth of our sun and into our own imagination. It is a good time to celebrate that life is what we make of it – peace and joy and justice all start with ideas that move with each heartbeat to arms that make them real. We are small and fragile compared to the great forces that sustain us, but that is no excuse for not taking what we have and making the best of it.

In middle Roman times this was the birthday of the invincible sun, Sol Invictus. This was a strange cult that thrived from about 200 until Emperor Constantine converted to Christianity in 313. While it may be a bit extreme to revive this ancient religion, there is a lot of tradition surrounding the solstice in nearly all parts of the northern hemisphere. It certainly shaped a lot of our celebrations of Christmas. But that’s no matter to the wobble of the planet itself, which has kept on regardless of how we do or don’t observe it.

May the spin of our planet measure your life well in the new year as we turn back towards the light, and may the darkness of the season illuminate your heart in ways that inspire you.

Peace be with you all this Winter Solstice.

Filed under: People & Culture]]>http://erikhare.com/2014/12/22/winter-arrives/feed/4wabbitoidIt is a season for light, leading us to the promise of SpringThe exact moment of the SolsticeSol Invictus, from which we get many Christmas traditionsSanta’s Downfallhttp://erikhare.com/2014/12/19/santas-downfall/
http://erikhare.com/2014/12/19/santas-downfall/#commentsFri, 19 Dec 2014 01:21:46 +0000http://erikhare.com/?p=6305]]>When, what to my wondering eyes should appear,
But a miniature sleigh, and eight tiny reindeer,
With a little old driver, so lively and quick,
I knew in a moment it must be St. Nick.

There has to be more to it, doesn’t there? Doesn’t this “Santa” guy have some ulterior motive?

Jack Skellington as Santa

That’s what my teenage daughter tells me is behind the latest trend in holiday specials, the destruction of Santa or revelation that Santa himself has a serious flaw of some kind. Nothing could possibly be that pure and nice, goes the reasoning, so what is he really up to? Giving away presents to little children just so that they’ll sit on your lap in a Department Store sounds pretty sleazy when you put it the right way.

I think the whole problem starts with “Nightmare Before Christmas”, one of my favorite works of animation ever. For those of you who haven’t seen it, it’s about ennui and hidden love as the Pumpkin King wants to try his hand at Christmas in the land where holidays live. Santa Clause is kidnapped and later tortured in this movie, but is ultimately rescued in time to “put things right”.

From there, it gets considerably worse. In Futurama, Santa is a robot programmed to judge who is naughty and who is nice with ruthless efficiency. Unfortunately, his standards were set too high, and he invariably judges everyone to be naughty. Oh, and he does his best to kill the naughty who find themselves out on Xmas Eve. It is used to bring a new meaning to Sleigh/Slay, and the Mistletoe becomes a TOW Missile. It’s not for the delicate-minded.

Everyone is naughty (except Zoidberg)

After this, all bets are off with Invader ZIM. Discovering that people are drawn to the character of Santa, a plucky invader from a planet known for enslaving decides to take over the Santa character with predictable results.

Where did all this come from? Is nothing sacred anymore, not even Santa? The short answers are that it comes from a deep cynicism about our own culture and no, nothing is sacred anymore. We aren’t a people that really want icons of goodness and cheer cluttering up our lives. Santa, like just about everything, is just one more thing that can be skewered to great effect. It’s like the scary clown figure that has become more popular than an ordinary clown.

I admit, I find all this stuff really funny. But it’s still a bit sad to think that there is no one standard of purity and happiness that hasn’t become fodder for a few jokes. My kids are growing up, so some of this I have to expect. What’s especially galling is that I brought all of these things into their lives. I only have myself to blame. Wait! I know! I can blame Santa! This was his ulterior motive all along! Right?

Filed under: People & Culture]]>http://erikhare.com/2014/12/19/santas-downfall/feed/2wabbitoidJack Skellington as SantaEveryone is naughty (except Zoidberg)Lowdown Oilhttp://erikhare.com/2014/12/17/lowdown-oil/
http://erikhare.com/2014/12/17/lowdown-oil/#commentsWed, 17 Dec 2014 01:08:22 +0000http://erikhare.com/?p=6301]]>The story of today is the price of oil. A month ago it looked as though it couldn’t go any lower as US wells were pegged to a production price of about $80 per barrel. Now, it’s at $60 per barrel. There are signs that many US wells will indeed keep operating as improvements in efficiency and a lower operating cost once the sunk costs once well is started leave room for more profit even at this low price. Cheap oil may be here to stay longer than we thought.

But with that, we still have the problems in Russia. The Ruble has fallen off a cliff, a problem often blamed on the price of oil. It’s deeper than that, and the flailing Russian response has in some ways made things worse. The currency has lost about 60% of its value in one year, versus about 40% for oil.

That’s not to say there aren’t threats as well as opportunities in the US beyond oil itself. Cheap oil changes a lot of games, and is worth thinking through.

It’s always been about the black stuff.

Let’s assume for a moment that West Texas Intermediate (WTI) crude oil is going to rebound a bit, but remain in the $60-$80 per barrel range for at least a year. We can assume that because we don’t know exactly why OPEC has refused to cut production it is probably true that they have a longer-term plan or problem. On the other hand, if they intend to shake out either Russia, Iran, US production, or all three it will take time. The strategy has been engaged and probably won’t be dropped for a while.

What does that mean? Cheap energy means a big savings for the US economy, which can only be bullish over the long haul. We consumed 6.89B barrels of petroleum products in 2013, so a savings of $20-$30 per barrel is $138-$207B per year, or upwards of 1.3% of GDP. It’s a big number.

Then again, according to one study, the oil boom has created as many as 2M jobs and increased the total product of the economy by $300B or so. It also contributes to the infrastructure that encourages manufacturing growth. So if oil becomes so cheap it reduces US production there is a bit of a problem.

It’s worth a lot less every day.

The biggest problem, however, remains in Russia. Their exports of oil were pretty much the only thing that has kept the nation afloat, a horribly delicate position that was bound to end badly at some point. Between the low price of oil, sanctions over Ukraine, and a generally weak economy to start with there is reason to believe that Russia is in danger of a complete collapse this Winter – one even harder than we forecast in October.

The freefall of the Ruble has been staggering in its ferocity. We can’t know yet how it will play out in the domestic economy and then in their politics, but it won’t be good. The problem is that banks in Russia were not particularly healthy to start with, so a strong disturbance like this may be enough to start a chain of failures. That’s when it really affects the people of Russia. The ultimate response will take some time to play out, but probably will be nasty.

If there is a general collapse all bets are off as to how the nation, or specifically Putin, respond. Will he focus on internal problems and stop messing with neighbors? Or will he seek distractions and reinforcement that the problems are all made by the West? This could be a bad time to be Russia’s neighbor, as if things in Ukraine could get worse.

Winter is unpleasant in Russia. Just as those who pushed it.

What we do know is that the crisis we can see coming will strike in the Winter – when it will hurt the most and when a military distraction is less likely to take place. By the time they might be ready to invade Kazakhstan or some other place the people of Russia might finally be sick of the whole act. An implosion might result.

No matter what, there is a lot to think through as cheap oil changes everything. It may yet be a boom for the US, despite the increasing reliance on our domestic oil industry for jobs and income. Then again, it may not affect domestic production that much, giving us the best of both worlds. It may make the world more dangerous, however, if Russia lashes out again.

We will know a bit more in a month. For now, enjoy the cheap gasoline and pray for peace.

Filed under: Money, Nooze]]>http://erikhare.com/2014/12/17/lowdown-oil/feed/16wabbitoidIt's always been about the black stuff.It's worth a lot less every day.Winter is unpleasant in Russia. Just as those who pushed it.Sen. Warren, Politics Inside Outhttp://erikhare.com/2014/12/15/sen-warren-politics-inside-out/
http://erikhare.com/2014/12/15/sen-warren-politics-inside-out/#commentsMon, 15 Dec 2014 06:48:17 +0000http://erikhare.com/?p=6294]]>As is so often the case today, bad news is good news. Sen. Elizabeth Warren (D-MA) had a terrible loss when an important provision of the Dodd-Frank financial reform was weakened over her very vocal objections, slipped into the critical budget deal when no one was supposed to be looking. But if you read the press, it was good for her because it increased her stature at a time when calls for her to run for President are only getting louder.

There are now two prominent calls for her to run, one by MoveOn and another independent one pushed by a group of major Obama backers. A true hero usually heeds the third call. The way the press is writing her story, that’s about to come. What does it all mean?

Sen. Warren in fighting form.

Sen. Warren’s real strength isn’t her status as a Progressive icon, a modern day Henry Wallace in a world still waiting for FDR. That image is not only wrong, it’s propaganda that has been spewed for the purposes of a political machine that seeks to divide the nation into Democrat and Republican, blue and red, for its own purposes. Her message is beyond that.

That’s the real magic of Sen. Warren that, for all the great press, has been utterly missed.

The issue at hand this time is that “swaps”, or market traded insurance policies that pay off if triggered by another financial event, can now be held by banks that have an implicit backing by a federal bailout. The most common of these are Credit Default Swaps (CDSs), which were horribly abused by Lehman among other companies before the reform. They were kept away from public backing because they carry far too much risk that is hard to quantify.

Mr. President, Democrats don’t like Wall Street bailouts,Republicans don’t like Wall Street bailouts. The American people are disgusted by Wall Street bailouts. And yet here we are five years after Dodd-Frank with Congress on the verge of ramming through a provision that would do nothing for the middle class, do nothing for community banks, do nothing but raise the risk that taxpayers will have to bail out the biggest banks once again.

The language here is important. Sen. Warren has said that she was once a Republican because, “I thought that those were the people who best supported markets. I think that is not true anymore.” She has carefully staked out her party affiliation since becoming involved in politics, and it’s not necessarily as a Democrat. In her book A Fighting Chance she appeared to rule out a run for President, the ultimate insider, with this now famous passage:

Insiders, however, get lots of access and a chance to push their ideas. People — powerful people — listen to what they have to say. But insiders also understand one unbreakable rule: They don’t criticize other insiders.

There’s only one reason to say this so prominently, and that’s to stake your claim to being an outsider. Sen. Warren has championed that role well, an a somewhat darkly pragmatic read shows that it actually positions her very well to run for President. The reason is simple – there are two political persuasions in the US today, and they are not Democrat and Republican. They are Establishment and Reform, Inside and Out.

Left or Right? That’s not the important question.

As she noted herself, the position she is taking is at least as much at home in the Tea Party as it is among Progressives. Getting past the artificial divides that are reinforced in an unthinking media is obviously the hard part, but the Establishment is itself hopeless divided, operating as if it believes its own BS. The opening for Reform, the true outsider coming in, is natural if the people of this nation get past the artificial divide that has been thrust on them.

By enhancing her outsider credentials, Sen. Warren has made her position stronger. But her real goal, whether as President or as the key advocate for reform, has to be to unite the people beyond the nonsense that separates and marginalizes their true interests. We can’t yet call her big loss good news because there is no sign of unity developing.

But for all that, we do have Sen. Warren – standing firm and not letting what little reform we’ve actually had implemented go down without a fight. Whether or not this becomes the kind of movement that finally topples the Establishment and institutes reform remains to be seen.

Was it a good week for Sen. Warren? Let’s see if she has a good few months first. The best part is yet to come, no matter what.

Filed under: Money, Nooze, Politics]]>http://erikhare.com/2014/12/15/sen-warren-politics-inside-out/feed/8wabbitoidSen. Warren in fighting form.It's hard to get past this image when nasty stuff keeps happening.Left or Right? That's not the important question.The Christmas Trucehttp://erikhare.com/2014/12/12/the-christmas-truce/
http://erikhare.com/2014/12/12/the-christmas-truce/#commentsFri, 12 Dec 2014 00:05:55 +0000http://erikhare.com/?p=6285]]>Christmastime stories all have a touch of magic in them. From spirits of Christmas past, present, and future to a real Santa Claus the light of the season becomes real through some divine spark that illuminates a life. But all of these fairy stories dim in comparison to one with a much lighter touch of providence acting only through the hearts and arms of men. And this story is also true.

The time is a century ago, near St Yves, France. The Great War has stalled into the mud as Germans and English have dug in yards apart. The men of both sides shiver as December settles deep into the trenches. Hired on as murderers, the stench of death around them, they chose instead for a few days to be something much more. For a brief moment, they even become friends.

German soldiers of the 134th Saxon Regiment and British soldiers of the Royal Warwickshire Regiment meet in no man’s land, December 26, 1914.

The Winter of 1914 was not what it was supposed to be as Europe plunged eagerly into war. Both sides expected victory by now, even though the War was only a few months old. What started as a glorious party had fallen into a cold stalemate along the Western Front, a line cutting through France. The German advance had been stopped, but not repulsed. No one knew what might come next.

As Christmas approached, the bored men started shouting at each other across the trenches. They were close enough for taunting, and usually did so eagerly. But this was Christmas. It was recounted in a letter home by Rifleman C H Brazier, Queen’s Westminsters, of Bishop’s Stortford:

You will no doubt be surprised to hear that we spent our Christmas in the trenches after all and that Christmas Day was a very happy one. On Christmas Eve the Germans entrenched opposite us began calling out to us ‘Cigarettes’, ‘Pudding’, ‘A Happy Christmas’ and ‘English – means good’, so two of our fellows climbed over the parapet of the trench and went towards the German trenches.

Half-way they were met by four Germans, who said they would not shoot on Christmas Day if we did not. They gave our fellows cigars and a bottle of wine and were given a cake and cigarettes. When they came back I went out with some more of our fellows and we were met by about 30 Germans, who seemed to be very nice fellows. I got one of them to write his name and address on a postcard as a souvenir. All through the night we sang carols to them and they sang to us and one played ‘God Save the King’ on a mouth organ.

A map of the Christmas Truce of 1914, from St Yves south.

The troops sang to each other all night, with both sides joining into “O Come All Ye Faithful” in both English and German. Along the tops of the trenches on the German side small Christmas trees came out, lit by candles, as a beacon of light and life shining over the dark mud and death.

Rifleman J. Reading, wrote to his wife that this continued along the lines on Christmas Day:

During the early part of the morning the Germans started singing and shouting, all in good English. They shouted out: “Are you the Rifle Brigade; have you a spare bottle; if so we will come half way and you come the other half.” At 4 a.m part of their Band played some Christmas carols and “God save the King”, and “Home Sweet Home.” You could guess our feelings. Later on in the day they came towards us, and our chaps went out to meet them. Of course neither of us had any rifles. I shook hands with some of them, and they gave us cigarettes and cigars. We did not fire that day, and everything was so quiet that it seemed like a dream.

A depiction of the Truce, as it passed into a terrific legend of Christmas peace,

There are reports that a soccer game broke out at one point and general merriment took the place of bullets and shells for one day. The good feelings continued in some places into the New Year as Winter wrapped them all together in a common quest for survival.

The truce did not last, of course, and at some point the commanders had their men shoot at each other again. The waves of bodies went over the top of the trench not in friendship but with bayonets drawn. The War was back on.

But for one brief moment there was Christmas. There was light and calm, there was life and hope. If only it could have lasted, and if only these fast friends could have resisted their commanders and kept the Christmas Truce of 1914 alive. But it was only a brief spark of the divine in a war that saw the depths of human degradation and destruction.

Though it didn’t last into 1915 the story of that magical moment can still give us all hope a century on.

Filed under: People & Culture]]>http://erikhare.com/2014/12/12/the-christmas-truce/feed/13wabbitoidGerman soldiers of the 134th Saxon Regiment and British soldiers of the Royal Warwickshire Regiment meet in no man's land, December 26, 1914.A map of the Christmas Truce of 1914, from St Yves south.A depiction of the Truce, as it passed into a terrific legend of Christmas peace,Despicable by Any Measurehttp://erikhare.com/2014/12/10/despicable-by-any-measure/
http://erikhare.com/2014/12/10/despicable-by-any-measure/#commentsWed, 10 Dec 2014 04:59:01 +0000http://erikhare.com/?p=6280]]>The Senate report on CIA torture has been released. It will be a hot political topic for some time to come, and the use of torture will likely have its defenders.

That’s a terrible problem, because many fundamental principles of our great nation have been violated through the practices used. The release of this information has indeed shamed us, but only a truly great nation can admit its mistakes and correct them. We will get through this, but more to the point we have to make sure that this never happens again.

George Tenet, CIA Director at the time of the torture, with President GW Bush.

The litany of offenses is long and still being digested. What it amounts to is that actions that were clearly outlawed in the US were farmed out to other nations where they could be conducted. One of the biggest arguments against reducing our defense spending and relying on our partnerships with other nations is that this somehow reduces our ability to act freely and potentially conflicts with our sovereignty, a concern that apparently does not apply to the dark side of our intelligence.

These techniques not only failed their purpose — to secure actionable intelligence to prevent further attacks on the U.S. and our allies — but actually damaged our security interests, as well as our reputation as a force for good in the world.

He knows firsthand that good information does not come from torture because he didn’t give up anything when it was done to him. One of the key findings in this report is that the excuse commonly offered for this torture – that it aided the hunt for Osama bin Laden – was completely false. That information came from other sources obtained without torture.

Waterboarding is only part of the horror.

All of this was done by an agency completely out of control. The report details how the CIA “provided extensive amounts of inaccurate and incomplete information to the White House and top national security staff.” They didn’t report to the President, they didn’t report to Congress. They didn’t report to anyone as they conducted operations on foreign soil apparently on their own. The complete lack of any reporting chain, let alone checks and balances, goes against everything that we know is necessary for keeping government from running amok.

In short, without any reporting chain at all, they could do this to anyone – you and I included.

More than anything else, the report offers no procedure for making sure that this never happens again. Everyone knows that it can’t, and by any of the laws of this nation it should never have occurred in the first place. But it did. So what is supposed to stop this in the future?

The act of shaming our intelligence community may seem extreme, but it is the only thing that the Senate can possibly do. Nothing else was able to reign them in.

In short, the litany of reasons why this should scare the bejaysus out of everyone is long. This occurred with no oversight or even a viable chain of command. It obtained no useful information. It was done in foreign nations where the presence of sensitive US intelligence had the potential to compromise our position at least as much as help it. The American people were routinely lied to about what was being done.

And, lest we forget, the actions taken were so despicable that the reputation of the United States of America has been blackened in the eyes of everyone, around the world, who values freedom and justice.

Edward Snowden was only one man, so how much of what is going on could he tell us?

What did we learn from this report? We learned that at least one part of our Federal government is completely and utterly out of control – it is, in fact, above the law and our Constitution. The logical conclusion is that what little we know about the NSA and their activities should be regarded as part of the same disgusting disregard for decency and law until it proves otherwise.

The release of this report has weakened our standing throughout the world, that is correct. But it is also the first step towards repairing our reputation. It also shows that we have a lot of work to do to regain the precious freedom that we, as a people, can claim as our inheritance. Fixing that and passing it on to the next generation must now be a top priority.

Filed under: Nooze, Politics]]>http://erikhare.com/2014/12/10/despicable-by-any-measure/feed/16wabbitoidGeorge Tenet, CIA Director at the time of the torture, with President GW Bush.Waterboarding is only part of the horror.Edward Snowden was only one man, so how much of what is going on could he tell us? Glad Tidingshttp://erikhare.com/2014/12/08/glad-tidings/
http://erikhare.com/2014/12/08/glad-tidings/#commentsMon, 08 Dec 2014 02:38:52 +0000http://erikhare.com/?p=6278]]>If you need a dose of Christmas cheer, it’s best to look in a very unlikely place. The business and financial press is positively melting down over the most recent jobs report, which showed an impressive 321k net increase in jobs. Given that Barataria has been very positive on the US economy in 2014, you would expect us to join in the merriment.

Sure, why not. Just don’t over-do it, because this is only a make-up call. There is nothing reported this week that hasn’t been true for a year, and the noise in the data makes it look especially strong for November. The truth is that job growth has been strong all year and we are on pace for a good 2015.

There are plenty of reasons to cheer, but like the office Christmas party a good time is no reason to get crazy.

There is work to be done.

First, we need to look at what was reported. Not only did November come in at +321k jobs, October was revised up to +243k and September to +271k. It’s a huge increase over the bump of +190k per month we were seeing one year ago, which implies that hiring is accelerating. This is all from the official data released by the Bureau of Labor Statistics (BLS).

But these data were not confirmed by ADP, which saw an increase of only 207.8k in November. Over the last year, ADP tells us that there were 2.5M jobs added, while the official BLS numbers come in at about 2.7M. These two never diverge by this much, meaning that something is up that we should keep an eye on. There’s a good chance that the BLS numbers will swoon a little in coming months as the two converge again.

That may not matter much, however. What matters most is the psychology of the situation, and that is overwhelmingly positive. The stock market reacted negatively to the good job news at first, probably over concerns that interest rates will have to rise as the economy picks up. That reversed later in the day as good news was finally accepted as good news.

Try anything. It’s bad out there.

Adding to the good news, it seems that employers are going to add more jobs in 2015. Whether you believe the official numbers or not, the acceleration that we’ve all been waiting for in 2014 may indeed be happening.

What needs to complete the cycle of good news are some reports of strong holiday sales. The expectations have been raised to a healthy gain of 4.1% over 2013. If retail performs well for the first time in six years we can expect the good news to keep coming.

And we have reached the point where that is what matters more than anything else. The news has been good, if not great, but what we have been looking for is a spate of optimism to help us turn the corner. Businesses need to expect a better tomorrow if they are going to start investing in themselves. Higher interest rates are actually a good thing if fairly conservative investments start to generate a decent return against crazy speculation.

You were expecting a holiday season in Whoville?

How good has the economic news been? Good enough to get everyone out of a Winter funk and into a rousing chorus of Christmas cheer. So far, that has been the element that has really been missing in the business section.

Is the news as good as everyone says? If everyone keeps saying it, sure. Good tidings create more positive feeling as we shake off the depression that has hung around us for far too long. A few hundred thousand more jobs is a good thing, but the exact numbers are less important than the expectations.

Merry Christmas to all and a Happy New Year! If you’re not exactly feeling it yet, you will be.

Filed under: Money]]>http://erikhare.com/2014/12/08/glad-tidings/feed/9wabbitoidThere is work to be done.Try anything. It's bad out there.You were expecting a holiday season in Whoville?A Charlie Brown Christmashttp://erikhare.com/2014/12/05/a-charlie-brown-christmas/
http://erikhare.com/2014/12/05/a-charlie-brown-christmas/#commentsFri, 05 Dec 2014 00:05:10 +0000http://erikhare.com/?p=6273]]>Christmas is a time for remembering everything that has come before us. It’s not a kind of memorial day when we remember what we lost, but instead a day to remember the great gifts that have come to us over the many years. The circle of gratitude is widened every year as the holiday expands with new love and new memories.

This is a special Christmas because it is the 50th one for which we have one of the great gifts of television, “A Charlie Brown Christmas”. In many ways this defines the tension of Christmas itself, even though very little in popular culture has been willing to decry the commercialism that is the true “War on Christmas”. And in the process it gave us a new definition of holiday cheer, bringing Vince Guaraldi’s cool jazz into the warm holiday like a sprig of winter itself.

The cover of Time Magazine on 9 April, 1965. It launched the strip into the stratosphere.

The project started in the Spring of 1965. Peanuts was the hot comic strip of the day, appearing on the cover of Time Magazine on April 9th. In a quick rush to cash in on the fame, Coca-Cola called producer Lee Mendelson, who had made a documentary about Schultz and Peanuts. They wanted him to make a special in time for Christmas. Mendelson said he had an idea for one, even though he hadn’t even contacted Schultz yet.

But the idea was a good one, and Schultz was quickly interested in the project. The script came together in just a couple of weeks, and had only one hitch – Schultz, a good St Paulite by birth, wanted the special to focus on what Christmas was all about. He insisted on the theme of commercialism killing Christmas and the passage from the Gospel of St Luke 2:8-14 (KJV)

And there were in the same country shepherds abiding in the field, keeping watch over their flock by night. And, lo, the angel of the Lord came upon them, and the glory of the Lord shone round about them: and they were sore afraid. And the angel said unto them, Fear not; for, behold, I bring you tidings of great joy, which shall be to all people. For unto you is born this day in the city of David a Savior, which is Christ the Lord. And this shall be a sign unto you: Ye shall find the babe wrapped in swaddling clothes, lying in a manger.And suddenly there was with the angel a multitude of the heavenly host praising God, and saying, Glory to God in the highest, and on earth peace and goodwill towards men.

Linus explains it in simple, soft words.

Adding at the end, “…That’s what Christmas is all about, Charlie Brown.”

That wasn’t the only chance they took. It was Mendelson’s idea to use the music of Vince Guaraldi, who wrote the piece “Linus and Lucy” along with other incidental music. Exactly why he thought of this is not recorded, but it’s clear that they were pushing this special to the very edges of a rather conformist world on the edge of change.

Legend has it that when the CBS executives saw it they were horrified. Overt Christianity? Anti-consumerism? Jazz? No laugh track? It broke all the rules. Supposedly it was already announced and printed in the schedules with no time to change it before it aired on 9 December, 1965.

It was an instant hit. Pre-empting The Munsters at 7:30 EDT, about 45% of the television audience watched it that night. Critics were unanimous and immediate in their praise, with Rick DuBrow of United Press International predicting, “the Peanuts characters last night staked out a claim to a major television future.”

“Hark! The herald angels sing!”

There is no doubt that it has become that, but what about the central message? What came of the idea that Christmas is a moment of peace and commercialism can ruin it? While “A Charlie Brown Christmas has been repeated at least once per year on network television, now for 50 times, has that message been taken to heart or picked up by a new generation?

The short answer is that as much as we love this show it remains almost alone in its simple and clear message. That’s a shame, but we still have this masterpiece.

How can the circle of peace and love be widened as we embrace this great tradition? The answer is in all of our hearts, just as it was in Charlie Brown’s. We all know the answer. What’s beautiful about “A Charlie Brown Christmas” is that it teaches us what we already know without a lecture or a harsh judgment. And that’s what love is all about, Charlie Brown.

Filed under: People & Culture]]>http://erikhare.com/2014/12/05/a-charlie-brown-christmas/feed/11wabbitoidThe cover of Time Magazine on 9 April, 1965. It launched the strip into the stratosphere.Linus explains it in simple, soft words."Hark! The herald angels sing!"